Cegedim : 2016 Revenue

PRESS RELEASE

Quarterly Financial Information as of December 31, 2016 IFRS - Regulated Information - Not Audited

Cegedim: organic revenue growth picked up in the fourth quarter of 2016

• The business model transformation is well under way, and the first positive impacts are visible

• Organic revenue growth amounted to 5.4% in Q4 2016, and 4.4% over the full year

• EBITDA target downgraded to around €60 million

Disclaimer: Pursuant to IAS 17 as it applies to Cegelease's activities, leases are now classified as financial leases, resulting in adjustments to the Q1, Q2, Q3 and Q4 2015 figures published in 2015. Readers should refer to the last annexe of this press release for full details of the adjustments. All of the figures in this press release reflect the adjustments. Unless otherwise specified, variations are expressed in comparison with the same period of the previous year.

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Boulogne-Billancourt, France, January 26, 2017 at 5:45pm CET Cegedim, an innovative technology and services company, posted consolidated Q4 2016 revenues from continuing activities of €122.5 million, up 2.7% on a reported basis and 5.4% like for like compared with the same period in 2015. For the full year 2016, revenues came to €440.8 million, up 3.4% on a reported basis and 4.4% like for like compared with the same period in 2015.

Like-for-like growth at the Health insurance, HR and e-services division picked up yet again in the fourth quarter, to 13.0% following 9.5% in the third quarter, despite the ongoing migration of clients over to SaaS/cloud offerings. On the other hand, the Healthcare professionals division posted a like-for-like decline of 4.2% in the fourth quarter, bringing its decline to 2.8% over the full year. This decline was chiefly attributable to the transition of offerings over to SaaS format, business delays in the US stemming from ongoing reorganization, and the continued impact on UK business, in 2016, of clients awaiting the launch of a new SaaS offer.

The business model transformation initiated in fall 2015 is beginning to pay off, as shown by the increase in like-for-like revenue growth to 5.4% in the fourth quarter and 4.4% over the full year 2016. As a reminder, the Group had revised its forecast upward multiple times during the year and was expecting growth of 4.0%.

In 2016, the transformation project resulted in several changes in senior management within the Healthcare professionals division in the US, UK and France. At the same time, investments devoted to R&D allowed Cegedim to launch a number of new products, notably in SaaS format. For example, the Group began to market its Smart Rx product for French pharmacists, Pulse Cloud Practice Management for US doctors, Vision anywhere for UK doctors, and a full SaaS e-invoicing platform using open source technology. The Group also substantially expanded its BPO offering for US doctors, HR departments and insurance companies, notably signing a major BPO contract with social protection and insurance group KLESIA and at the end of the year with the mutual insurance group YSTIA.

Cegedim

137 rue d'Aguesseau, 92100 Boulogne-Billancourt

Tel: [phone]

www.cegedim.com

Public company with share capital of 13,336,506.43 euros SIREN 350 422 622

1. C. S. Nanterre B 350 422 622 Page 1

   As we noted earlier, the business model transformation is well under way, so growth momentum is expected to pick up in 2017 and lead to improving profitability in the future. We expect to see the full impact of the transformation in 2018. 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.

   As predicted, 2016 was a transitional year. Implementing the transformation plan adversely affected the Group's profitability. Furthermore, Cegedim's management has appointed a new CEO in the US and has decided to change its approach to two disputes with customers in the US. These changes resulted in the Group signing agreements that led to a conversion of receivables into a significant loss in 2016. Because this loss can't be classified as a special item under IFRS, the EBITDA target will not be met in 2016.

   Revenue trends by division

   • Fourth quarter 2016 highlights

     In € mi ll ions Health insurance, HR and e-services Healthcare professionals

     Activities not allocated

     Cegedim

     2016	2015	Chg. L-f-l	Chg. Reported
     77.1	68.5	+13.0%	+12.5%
     44.4	49.3	(4.2)%	(9.9)%
     1.0	1.4	(33.5)%	(33.5)%
     122.5	119.3	+5.4%	+2.7%

     Fourth quarter

     In the fourth quarter of 2016, Cegedim posted consolidated revenues from continuing activities of €122.5 million, up 2.7% on a reported basis. Excluding an unfavorable currency translation effect of 2.6%, revenues rose 5.4%. There was no impact from acquisitions or divestments.

     In like-for-like terms the Health Insurance, HR and e-services division's revenues rose by 13.0%, whereas the

     Healthcare professionals division's revenues fell by 4.2%.

   • FY 2016 highlights

     In € mi ll ions Health insurance, HR and e-services Healthcare professionals

     Activities not allocated

     Cegedim

     2016	2015	Chg. L-f-l	Chg. Reported
     262.3	234.7	+10.5%	+11.8%
     175.2	187.2	(2.8)%	(6.4)%
     3.3	4.2	(21.6)%	(21.6)%
     440.8	426.2	+4.4%	+3.4%

     Full year

     Over the full year 2016, Cegedim posted consolidated revenues from continuing activities of €440.8 million, up 3.4% on a reported basis. Excluding an unfavorable currency translation effect of 1.7% and a 0.8% boost from acquisitions, revenues rose 4.4%.

     In like-for-like terms the Health Insurance, HR and e-services division's revenues rose by 10.5%, whereas the

     Healthcare professionals division's revenues fell by 2.8%.

     Analysis of business trends by division

   • Health insurance, HR and e-services

The division's Q4 2016 revenues came to €77.1 million, up 12.5% on a reported basis. There was no impact from acquisitions or divestments. Currency effects made a negative contribution of 0.5%. Like-for-like revenues rose 13.0% over the period. The division's 2016 revenues came to €262.3 million, up 11.8% on a reported basis. The July 2015 acquisition of Activus in the UK made a positive contribution of 1.4%. Currencies had virtually no impact. Like-for-like revenues rose 10.5% over the period. The Health insurance, HR and e-services division represented 59.5% of consolidated revenues from continuing activities, compared with 55.1% over the same period a year earlier.

This significant 2016 revenue growth was chiefly attributable to:

• Cegedim Insurance Solutions, with double-digit growth in the iGestion BPO business for health insurance companies and mutual insurers, continued robust growth in the third party payment flow management activity, and a very fine performance in software and services devoted to the personal protection insurance sector, including double-digit growth in the fourth quarter despite the impact of transitioning to SaaS format.

• Excellent momentum at the Cegedim e-business unit, and a strong acceleration in the fourth quarter. In addition, Cegedim e-business fully benefited from the start of operations with new clients on its Global Information Services SaaS platform for digital data exchanges, including payment platforms.

• The start of operations with numerous clients on the Cegedim SRH SaaS platform for human resources management, resulting in double-digit revenue growth over the full year.

  • Healthcare professionals

    The division's Q4 2016 revenues came to €44.4 million, down 9.9% on a reported basis. Currency effects made a negative contribution of 5.7%. There was no impact from acquisitions or divestments. Like-for-like revenues fell 4.2% over the period. The division's 2016 revenues came to €175.2 million, down 6.4% on a reported basis. Currency effects made a negative contribution of 3.7%. There was no impact from acquisitions or divestments. Like-for-like revenues fell 2.8% over the period. The Healthcare professionals division represented 39.7% of consolidated revenues from continuing activities, compared with 43.9% over the same period a year earlier.

    The decline in revenues in 2016 and in the last quarter was chiefly attributable to:

• The transition of clients in certain markets, who are increasingly attracted to cloud-based offerings, over to SaaS versions;

• In the UK, the fact that the Group only began marketing the new SaaS offering to doctors in January 2017;

• The September 2016 release in France of the new Smart Rx offering - a comprehensive pharmacy management solution built around a hybrid architecture that combines local and cloud-based computing. The new solution allows networks amongst individual pharmacies and links with healthcare professionals. The launch of this new offering, combined with implementation of a new organization, should enable this business to return to growth in the months ahead.

  These performances were partially offset by:

• Double-digit growth at Pulse over the full year, despite a contraction in the last quarter owing to the postponement of certain projects, mainly related to the unit's RCM offerings. The Group has implemented a new, more responsive organization that should enable the business to return to a path of sustainable growth, particularly in BPO.

• Robust growth in products and services designed for physical therapists and nurses in France;

• Double-digit growth at Cegelease, which offers financial leases.

  • Activities not allocated

    The division's Q4 2016 revenues came to €1.0 million, down 33.5% on a reported basis and like for like. There were no currency effects and no acquisitions or divestments. The division's 2016 revenues came to €3.3 million, down 21.6% on a reported basis and like for like. There were no currency effects and no acquisitions or divestments. The Activities not allocated division represented 0.7% of consolidated revenues from continuing activities, compared with 1.0% over the same period a year earlier.

    This trend reflects the return to a normal level of billing.

    Highlights

    Apart from the items cited below, 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.

  • New credit facility

    In January 2016, the Group took out a new five-year revolving credit facility (RCF) of €200 million. The applicable interest rate for this credit facility is Euribor plus a margin. The Euribor rate can be the 1-, 3- or 6- month rate; if Euribor is below zero, it will be deemed to be equal to zero. The margin can range from 0.70% to 1.40% depending on the leverage ratio calculated semi-annually in June and December (Refer to point 2.4.1.1 on page 14 of the Q2-2016 Quarterly Financial Report).

  • Exercise of the call option on the entire 2020 bond

    On April 1, 2016, Cegedim exercised its call option on the entire 6.75% 2020 bond with ISIN code XS0906984272 and XS0906984355, for a total principal amount of €314,814,000.00 and a price of 105.0625%, i.e. a total premium of

    €15,937,458.75. The company then cancelled these securities. The transaction was financed by drawing a portion of the RCF obtained in January 2016 and using the proceeds of the sale to IMS Health. Following this transaction, the Group's debt comprised the €45.1 million FCB subordinated loan, the partially drawn €200 million RCF, and overdraft facilities.

  • S&P has raised Cegedim's rating to BB with stable outlook

    After Cegedim announced that it would redeem the entire 6.75% 2020 bond, rating agency Standard and Poor's raised the company's rating on April 28, 2016, to BB with a stable outlook.

  • Acquisition of Futuramedia Group

    Cegedim announced on November 2, 2016, that it had signed a heads of agreement to acquire Futuramedia Group. This deal will strengthen the digital offerings of its subsidiary RNP, which specializes in pharmacy displays in France. The acquisition was completed on November 30, 2016.

    In 2015, Futuramedia Group generated revenues of around €5.4 million. It will have an accretive impact on Cegedim

    Group's margins and began contributing to the Group's consolidation scope from January 1, 2017.

  • Kadrige sale

    The Kadrige business was sold to IMS Health on November 9, 2016.

    Significant post-closing transactions and events

    Apart from the items cited below, to the best of the company's knowledge, there were no events or changes after the accounts were closed that would materially alter the Group's financial situation.

  • Euris litigation

Cegedim has just received a summons from Euris stemming from a decision by the Competition Authority announced in 2015. Cegedim would like to emphasize that it has appealed the decision and a ruling is still pending at the Court of Cassation.

Outlook

As predicted, 2016 was a transitional year. Implementing the transformation plan adversely affected the Group's profitability. Furthermore, Cegedim's management has appointed a new CEO in the US and has decided to change its approach to two disputes with customers in the US. These changes resulted in the Group signing agreements that led to a conversion of receivables into a significant loss in 2016. Because this loss can't be classified as a special item under IFRS, the EBITDA target will not be met in 2016. It should be close to €60 million.

The business model transformation is well under way, so growth momentum is expected to pick up in 2017 and lead to improving profitability in the future. We expect to see the full impact of the transformation in 2018.

The Group meets all its bank covenants as of December 2016.

The Group does not expect any significant acquisitions in 2017 and does not disclose profit projections or estimates.