Cerba - comment

Cerba SUNs are up on news released in December that in the context of a new healthcare framework in France signed by biologist unions and the CNAM earlier today. The agreement accepts the c. -9% price cut impacting French Routine testing from Sep’24 but removes the ‘envelope’ for French state lab spending (previously capped total expenditure at +0.4 % per year over the 2024-26 period) such that elevated volume growth will no longer be compensated for with further price cuts. The agreement also includes a further €70m committed over 2025/26 (€50m/20m in 2025/26 respectively), partially reversing the -€360m savings targeted by the Sep’24 tariff adjustment. The news is positive for the Lab sector (relevant for BIOGRP, CERBA , SYABGR), putting a pause on the string of higher-than-normal price reductions we have seen since 2023.

As for Cerba specifically, we feel this probably makes our projections somewhat conservative. The agreement will buoy 50% of group revenues (routine testing). In time, volume growth (from higher demand & demographics) should offset price cuts and accelerate revenues.