CompuGroup Medical : Group Annual Report 2023

CompuGroup Medical

Annual Report 2023

WE CREATE THE FUTURE OF E-HEALTH

TABLE OF CONTENTS

FOR OUR SHAREHOLDERS	4
CEO letter	4
Share information	7
Managing Directors	9
Report of the Supervisory Board	10
Report of the Joint Committee of
CompuGroup Medical SE & Co.
KGaA	15
COMBINED MANAGEMENT REPORT	17
1. Foundations of the group	17
1.1. Group business model	17

1.2. Changes to the composition of

	the group	21
1.3.	Objectives and strategies	21
1.4.	Management system	21
1.5.	Research and development	22
2. Economic report	24

2.1. Macroeconomic and industry-

	specific conditions	24
2.2.	Business performance	25
2.3.	The group's position	30
2.3.1 Results of operations of the
	group	30
2.3.2 Financial position	34
2.3.3 Net assets of the group	39
2.3.4 Net assets, financial position and
	results of operations of
	CompuGroup Medical SE & Co.
	KGaA	40

2.3.5 Overall assessment of the business performance and the group's and the company's

situation

44

2.4. Financial and non-financial

		performance indicators	45
3.	Guidance, risk and opportunity
	report	.................................................	51
	3.1.	Guidance report	51
	3.2.	Risk report	53
	3.2.1	Risk management system	53
	3.2.2	Risks	56
	3.3.	Report on opportunities	65
4.	Internal control and risk
	management system	72
	4.1.	General	72
	4.2. In relation to accounting
		(section 289 (4) and
		section 315 (4) of the German
		Commercial Code (HGB))	73
	4.3.	Effectiveness	76
5.	Risk reporting in relation to the use
	of financial instruments	77
6.	Takeover-related disclosures	78
7.	Corporate Governance Statement	86
8.	Separate non-financial report in
	accordance with section 298 b and
	section 315 b HGB	87
9.	Final declaration on the
	dependency report	88

Annual Report 2023

CompuGroup Medical SE & Co. KGaA

1

TABLE OF CONTENTS

CONSOLIDATED FINANCIAL STATEMENTS
FOR FINANCIAL YEAR 2023	89
Consolidated statement of financial
position	89
Consolidated income statement	91
Consolidated statement of total
comprehensive income	92
Changes in consolidated equity	93
Consolidated statement of cash flows	94
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS	95
A. General disclosures	95
B. Key accounting principles and
measurement methods	97
C. Principles of consolidation	101

1. Summary of the principal accounting and measurement methods and underlying

assumptions

120

1. Notes on items on the statement of financial position and income

statement	146
F. Segment reporting	198
Segment report	199
G. Other disclosures	201
FURTHER INFORMATION	241
Responsibility statement	241
Independent Auditor's Report	242
FINANCIAL CALENDAR	253
IMPRINT	254

Annual Report 2023

CompuGroup Medical SE & Co. KGaA

2

REVENUESLOCATIONSEMPLOYEES

€ 1.19 billion

20 countries

>9,000

CompuGroup Medical is one of the leading e-health providers worldwide. With a revenue base of EUR 1.19 billion in 2023, its software products are designed to support all medical and organizational tasks in private medical practices, pharmacies, laboratories, hospitals and social welfare institutions. Its information services for all parties involved in the healthcare system and its web-based personal health records contribute towards safer and more efficient healthcare.

Our mission: We create the future of e-health!

The backbone of CompuGroup Medical's services is its unique customer base including physicians, dentists, pharmacies, other healthcare professionals in outpatient and inpatient facilities as well as insurance and pharmaceutical companies. CompuGroup Medical has sites in 20 countries and distributes its products in 60 countries around the world. More than 9,000 highly qualified employees create sustainable solutions to meet the steadily growing demands in healthcare.

PURPOSE

"Nobody should suffer or die just because at some point medical information was missing."

Frank Gotthardt, Founder CompuGroup Medical

Annual Report 2023

CompuGroup Medical SE & Co. KGaA

3

FOR OUR SHAREHOLDERS

CEO letter

Michael Rauch

Chief Executive Officer (CEO)

Dear shareholders,

On average, a doctor in Germany is able to spend less than eight minutes with each patient. No doctor is likely to have sworn the Hippocratic oath with this in mind, and the expectations that we all have when we are sick and need medical help don't correspond either. Therefore, this cannot be the last word of wisdom for a highly developed healthcare system. And yet it is, in fact, a daily reality.

A report∗ shows where the problem lies: for every hour that a medical practice spends with their patients, they have to schedule three to four additional hours for administrative tasks. And as if that were not already more than enough, there is also a phenomenal stream of new knowledge that needs to be recorded: global medical expertise doubles every 72 days. Processing and implementing this knowledge in treatments for the benefit of the patient is one of the greatest challenges facing healthcare professionals worldwide.

At CompuGroup Medical, we are firmly at the side of healthcare professionals who have to deal with all of this on a daily basis by enabling them to use our established technologies, but above all our pioneering digital innovations. Because as great as the challenges in the healthcare sector are, the opportunities that are currently available to us all, not least through Artificial Intelligence (AI), are just as great: AI has the potential to bring sustained change and to improve our world in the long term. AI makes it possible to classify and channel the gigantic amount of medical knowledge available. This enables our products to provide even better support in making a diagnosis. CGM's AI solutions help to identify rare diseases and develop new drugs and therapies, and AI can be integrated into CGM products to assist with both billing and practice management. Artificial Intelligence, embedded in our software, makes knowledge more tangible rendering work easier and faster. Thus, it enables us to give something very

∗ Attipoe S et al. Characterization of Electronic Health Record Use Outside Scheduled Clinic Hours […]. JMIR Med Inform., May 12, 2022

Annual Report 2023

CompuGroup Medical SE & Co. KGaA

4

FOR OUR SHAREHOLDERS

CEO letter

fundamental back to healthcare professionals: time for their patients. This leads to better healthcare for everyone - in line with CompuGroup Medical's purpose, as worded by our company founder Frank Gotthardt: "Nobody should suffer or die just because at some point medical information was missing."

It is clear that the future medical world will become even more digitized, even more data-based, even more connected and even more effective. E-prescriptions and electronic patient files are the next milestones for the German healthcare system. They show us what is possible, but the possibilities reach even far beyond this. Intelligent data solutions will bring significant support to healthcare providers, which is why this is one of the strategic focuses for us at CompuGroup Medical.

We are convinced that Artificial Intelligence has great potential. For example, we have already further digitized our internal processes and made them more effective with the "ChatCGM" AI tool tailored to our company. This is a first, very specific step, which made 2023 a defining year for the future of our company. We have boldly opened the door to the digital future as a pioneer in our industry. Our efforts to use Artificial Intelligence profitably are focused on creating products and solutions for healthcare providers and implementing them for the benefit of patients. We also focus on three other pillars of Artificial Intelligence: optimizing software development, service and support, as well as administrative processes. Our customers, their patients and, last but not least, you as our shareholders will benefit significantly from this.

We do so from a position of strength. CompuGroup Medical is a leader when it comes to groundbreaking innovations. It is in our DNA: when designing e-health solutions, we can draw on our unique experience and close partnerships with our customers around the world, as well as the outstanding expertise of our team. We have more than 9,000 employees at locations in 20 countries who work together on a daily basis to provide doctors, pharmacists, laboratory and nursing staff with the right information to care for patients, both outpatients and inpatients in post-acute, acute and intensive care.

Financial year 2023

In the past financial year we have once again demonstrated that we are addressing the right topics and implementing important trends. Our organic growth provides clear evidence of this. Our quality standards are clear: CompuGroup Medical plays a pioneering role in realizing the digital patient journey, supporting our customers with convincing solutions that greatly facilitate daily work in practices, clinics and pharmacies.

To put it in concrete terms: initiatives to digitize the German healthcare system by the Federal Ministry of Health have bestowed the sector with significant momentum in 2023. According to gematik, as many as 15 million e-prescriptions were filled in Germany last year, and almost all pharmacies and the majority of private medical practices in Germany were able to issue or accept electronic prescriptions by the end of the year. Our software solutions have supported this development, placing us at the forefront of this fundamental reform of the healthcare sector.

Annual Report 2023

CompuGroup Medical SE & Co. KGaA

5

FOR OUR SHAREHOLDERS

CEO letter

However, our growth path is not restricted to Germany, it is global. Following the successful integration of eMDs in the US, we rolled out eMEDIX Clearinghouse, our holistic software solution for billing healthcare services. Our significantly improved competitive situation in the demanding US growth market was also reflected in a large number of "Health IT certifications" and by winning first place in the Best in KLAS prize awarded by KLAS Research, the most important ranking of the "Association for Information Systems".

In Italy we have initiated a number of pioneering projects, e.g., a voice recognition software for dentists, a chatbot for pharmacies and various telemedicine projects.

The Hospital Information Systems segment has seen a strong order intake in connection with the German Hospital Future Act (KHZG), which enabled us to increase our revenue guidance twice in 2023 for projects in connection with KHZG. In this context, we established lighthouse projects with two leading university hospitals. By partnering with leading operators of rehabilitation facilities, we also provide high- performance, standardized information systems in all facilities. This increases the quality of care and service immensely.

All these positive developments in 2023 are reflected in our financial figures. We generated revenues of EUR 1.19 billion, equivalent to a 5 % increase compared to 2022, which was also a successful year. Operating income (adjusted EBITDA) increased to a new record high of mEUR 265.

Gratitude and outlook

We would like to sincerely thank our employees for their great commitment in the past financial year and we thank our customers and you, our shareholders, for the trust you place in us.

We will continue to launch leading products and solutions in 2024 in order to continue growing with our customers, to further increase our earnings and to invest sustainably in modern e-health solutions. We will continue to focus on shaping the future of e-health.E-Health is our expertise, our passion and urgently needed by patients and society alike. And that is what motivates us.

Yours,

Michael Rauch

Chief Executive Officer (CEO)

Annual Report 2023

CompuGroup Medical SE & Co. KGaA

6

FOR OUR SHAREHOLDERS

Share information

The CompuGroup Medical shares are listed in the Prime Standard of the Frankfurt Stock Exchange under the securities identification number A28890 (ISIN DE000A288904) as well as in the SDAX and TecDAX under the ticker symbol (COP (FRA: COP). As at December 31, 2023, the share capital consists of 53,734,576 shares each representing EUR 1.00 of the share capital.

Key data

		2023	2022
Year-end price	EUR	37.90	35.98
Year high	EUR	51.70	71.85
Year low	EUR	33.00	31.64
Market capitalization*	mEUR	2,037	1,933
Earnings per share, adjusted	EUR	2.06	1.80
Dividend per share	EUR	1.00**	0.50

• At December 31.
• As proposed for 2023 to the Annual General Meeting.

Share price

The volatility of the stock market and the CGM share in financial year 2023 was caused by the interest rate environment, high inflation rates and increasing trade restrictions.

Following the challenging stock market year in 2022, the CGM share stood at EUR 36.74 at the beginning of 2023 (January 2). A positive price performance in the first half of the year was followed by a period with price adjustments. The share reached its annual high of EUR 51.70 on May 22, 2023 and the lowest level on December 7 at EUR 33.00.

The reference indexes SDAX and TecDAX showed a similar performance in the first three quarters of the year. The initial positive trend that lasted until mid-year had flattened by the end of October. However, the fourth quarter saw indexes recovering more strongly than the CGM share until the end of 2023. The year-end closing price of the CGM share was EUR 37.90, corresponding to a market capitalization of EUR 2.04 billion. The CGM share price was thus 5.3 % above the prior year's closing price. The performance of the relevant indices for the reporting year, SDAX and TecDAX, was 17 % and 20 % in the same period.

Dividend

The total dividend payout in financial year 2023 amounted to mEUR 26.1. This corresponded to a dividend of EUR 0.50 per share. For financial year 2023, a dividend of EUR 1.00 per share will be proposed to the Annual General Meeting on May 22, 2024. Subject to the approval of the Annual General Meeting, the distribution will amount to mEUR 52.2. The total distribution amount stated above does not take into account any change in the number of shares entitled to dividends as a result of any capital measures and share buybacks. Based on the closing price for 2023 (EUR 37.90), this is equivalent to a dividend yield of 2.6 %.

Annual Report 2023

CompuGroup Medical SE & Co. KGaA

7

FOR OUR SHAREHOLDERS

Share information

Shareholder structure as at December 31, 2023

	share in %
Frank Gotthardt (Founder and Chairman of the Administrative Board)	33.37
Prof. Dr. Daniel Gotthardt (Member of the Administrative Board)	6.66
Dr. Brigitte Gotthardt	6.29
Dr. Reinhard Koop	3.72
Treasury shares	2.79
Free float (German Stock Exchange definition)	47.16

Investor relations

The goal of investor relations activities is to provide investors and the capital markets with information that is comprehensive, relevant and precise at the same time.

The Investor Relations section on the company website (www.cgm.com/ir) provides comprehensive information such as financial reports, stock exchange information, relevant news as well as the financial calendar and company presentations. Conference calls for investors and analysts are held upon the publication of quarterly and annual figures. On September 7, 2023, the Managing Directors and the CEO of the US business presented the corporate strategy for CGM at the annual Capital Markets Day in Koblenz. In addition, the presentations by the Managing Directors, in which they provided information on the milestones achieved following the investment initiative, were also streamed live on the company website. All of this content is available on the website as a video webcast or as a PDF download. CompuGroup Medical also participated in various national and international capital market conferences as well as virtual events.

At year-end, thirteen analysts followed the company's business performance on a regular basis. They issued nine Buy recommendations, three Hold and one Sell recommendation.

Annual Report 2023

CompuGroup Medical SE & Co. KGaA

8

FOR OUR SHAREHOLDERS

Managing Directors

Emanuele	Hannes	Michael	Daniela	Dr. Ulrich
Mugnani	Reichl	Rauch	Hommel	Thomé

Michael Rauch --- Chief Executive Officer (CEO)

Michael Rauch joined CompuGroup Medical as Chief Financial Officer in August 2019. In June 2022, he was appointed Spokesman for the Managing Directors and since May 2023, he has been the Chief Executive Officer of CompuGroup Medical. Before that, he was able to gather close to 20 years of experience in various positions in finance and strategy development at international corporations and consulting firms. He has been appointed as Managing Director until July 31, 2027.

Daniela Hommel --- Chief Financial Officer (CFO)

Daniela Hommel has been the Chief Financial Officer of CompuGroup Medical since February 1, 2024. She previously held different finance and controlling positions at a major German medical technology and healthcare corporation from 2012 onwards, including CEO of the corporation's digital business subsidiary. She has been appointed as Managing Director until January 31, 2027.

Emanuele Mugnani --- Managing Director Ambulatory Information Systems Europe

Since February 2022, Emanuele Mugnani has been responsible for Ambulatory Information Systems Europe and for the Pharmacy Information Systems Segment (PCS). He joined the CGM Italy Group in 2014 as General Manager for Pharmacy Information Systems in Italy and has been appointed as Managing Director until February 14, 2025.

Hannes Reichl --- Managing Director Inpatient and Social Care

Hannes Reichl has been working at CompuGroup Medical in various leading positions since 2007. In 2018, he took over the hospital and laboratory business of CompuGroup Medical, which he previously led as Senior Vice President. He has been appointed as Managing Director until October 31, 2027.

Dr. Ulrich Thomé --- Managing Director Ambulatory Information Systems DACH

Ulrich Thomé heads the Ambulatory Information Systems segment for the DACH region. Before joining CGM in August 2023, he worked in different fields of the German healthcare system and healthcare IT for more than 16 years. He has been appointed as Managing Director until October 31, 2026.

Annual Report 2023

CompuGroup Medical SE & Co. KGaA

9