diff --git a/NEWS.md b/NEWS.md
index 2a428d9..fa7cedb 100644
--- a/NEWS.md
+++ b/NEWS.md
@@ -2,6 +2,8 @@
 
 * Bioconductor 3.20, October 2024
 
+* Fix correctly assign levels to factors in R reader with **anndata** v0.7 files (Fixes #122)
+
 ## zellkonverter 1.15.3 (2024-10-04)
 
 * Correctly assign levels to factors in R reader (Fixes #122)
diff --git a/R/read.R b/R/read.R
index 36537b7..09f9827 100644
--- a/R/read.R
+++ b/R/read.R
@@ -368,7 +368,8 @@ readH5AD <- function(file, X_name = NULL, use_hdf5 = FALSE,
         levels <- as.vector(
             rhdf5::h5read(file, file.path(path, "__categories", cat_name))
         )
-        out_cols[[cat_name]] <- factor(out_cols[[cat_name]], levels = levels)
+        codes <- out_cols[[cat_name]] + 1L
+        out_cols[[cat_name]] <- factor(levels[codes], levels = levels)
     }
 
     ## rhdf5::h5readAttributes(file, "var") |> str()