Spire Healthcare Group Plc · LSE:SPI
Spire Healthcare — H1 2020 Earnings Presentation
40 slides from Spire Healthcare's earnings presentation, Sep 17, 2020
Slide 1: H1 20 Results Presentation
H1 20 Results Presentation 17 September 2020
Slide 2: Disclaimer
Disclaimer These materials contain certain forward-looking statements relating to the business of Spire Healthcare Group plc (the “Company”), including with respect to the progress, timing and completion of the Company’s development, the Company’s ability to treat, attract, and retain patients and c
Slide 3: Zoom Webinar rules of engagement
Zoom Webinar rules of engagement All attendee lines are muted The Chat function is disabled Please submit your name and organisation using the Q&A function Cora will moderate the session and unmute your line for you to ask your question Any problems please e mail Laura.Young@ spirehealthcare.com 3
Slide 4: Agenda
Agenda H1 20 Overview Justin Ash, Chief Executive Officer H1 20 Financial Review Jitesh Sodha, Chief Financial Officer Operations and Strategy Review John Forrest, Chief Operating Officer Q&A 4
Slide 5: H1 20 Overview
H1 20 Overview Justin Ash, Chief Executive Officer
Slide 6: H1 20 highlights
H1 20 highlights Provided vital Building momentum Strong momentum in support to NHS Strengthened the in private and January and February during COVID Spire business operational pandemic efficiencies in H2 Strong platform to deliver growth in 2021 and beyond 6
Slide 7: H1 overview: Retained focus on strategy whilst responding to COVID pandemic
H1 20 overview Retained focus on strategy whilst responding to COVID pandemic Building momentum n H2 clinical Built safe and efficient Strong momentum in Jan/Feb Provided vital support to NHS pathways • Private revenues grew over • Historic agreement to • Major cross-training 3% in January and Febru
Slide 8: H1 overview: Retained focus on strategy whilst responding to COVID pandemic
H1 20 overview Retained focus on strategy whilst responding to COVID pandemic Building momentum n Strengthened the Spire H2 business Supported our colleagues Building momentum in H2 • Protected cash/liquidity • Individual risk assessments • PMI and self-pay recovering • Accelerated efficiency • Digi
Slide 9: Our go forward strategy remains unchanged
Our go forward strategy remains unchanged First choice for Improving NHS key Uncompromising private revenue, profit partner on patient safety patients and cash 9
Slide 10: 2021: Set up for success in the "new normal"
2021: Set up for success in the “new normal” First choice for Uncompromising on Improving revenue, private patients NHS key partner patient safety profit and cash • Re-growing private • c. 10m people on • Continued focus on • Cost of COVID-19 remains key focus shadow waiting lists quality, especiall
Slide 11: H1 20 Financial Review
H1 20 Financial Review Jitesh Sodha, Chief Financial Officer
Slide 12: H1 20 key messages
H1 20 key messages Moved quickly to Focussed on cash Significant pent up Strong start to year NHS agreement management demand 12
Slide 13: Financial headlines H1 20: P&L
Financial headlines H1 20: P&L Revenue Adjusted EBITDA Adjusted EBIT £401.9m £61.6m £14.9m (H1 19: £491.6m) (H1 19: £96.8m) (H1 19: £51.4m) Adjusted loss Adjusting items Loss after tax before tax £204.7m £233.1m £26.6m (H1 19: £0.4m) (H1 19: £7.1m) (H1 19: £10.0m profit) 13
Slide 14: Financial headlines H1 20: balance sheet
Financial headlines H1 20: balance sheet Working capital Net bank debt Capex benefit unchanged £19.5m £13.2m £330.6m (H1 19: £19.7m) (H1 19: £11.8m (FY19: £330.0m, reduction) H1 19: £362.2m) Facility and Dividend Goodwill write covenant waiver suspended down £200m extended 14
Slide 15: NHS contracts
NHS contracts • Signed in March 2020 with NHS England, similar agreements with NHS Wales and Scotland followed • All hospitals, staff, clinical expertise and resources made available to NHS • Cash costs covered including operating costs, overheads, rent and interest plus a cost of capital • Capex an
Slide 16: Revenue by payor
Revenue by payor H1 20 (£m) H1 19 (£m) Variance (%) PMI 145.8 247.0 (41.0%) Self-pay 47.7 88.6 (46.2%) Total private 193.5 335.6 (42.3%) Total NHS 200.4 143.7 39.5% Other 8.0 12.3 (35.0%) Total revenue 401.9 491.6 (18.2%) 16
Slide 17: Strong cash position maintained
Strong cash position maintained H1 2020 (£m) Cash from operating activities 58.8 Working capital movement 13.2 Capex (28.1) Financing activities (47.4) Other 3.6 Increase in cash 0.1 Opening cash balance 90.8 Closing cash balance 90.9 17
Slide 18: Supportive lenders and extension of Senior Facility maturity
Supportive lenders and extension of Senior Facility maturity Waiver now also agreed Lenders have also Already confirmed for June 21 testing. agreed to one year waivers for covenant Monthly Liquidity extension to the testing for June & Measure is now in maturity of the Senior December 2020 effect. Fa
Slide 19: Outlook – well positioned for the "new normal" in 2021
Outlook – well positioned for the “new normal” in 2021 Strong position to service H2 20 expected to be in-line demand with safe and with H1 20 Significant pent-up demand efficient pathways Potential upside from NHS established contract incentives Trading returning to 2019 levels in 2021 19
Slide 20: Operations and Strategy Review
Operations and Strategy Review John Forrest, Chief Operating Officer
Slide 21: Strategic focus
Strategic focus Preparing for the future First choice for Improving NHS key Uncompromising private revenue, profit partner on patient safety patients and cash 21
Slide 22: Leading through the COVID emergency with One Spire approach
Leading through the COVID emergency with One Spire approach • Crisis management plan activated on 17 February • 213 days of COVID plan implementation • Implemented new managerial command structure leveraging Business Unit Directors and regional teams • Co-ordinated approach put safety of patients, t
Slide 23: Building strong relationships with key stakeholders
Building strong relationships with key stakeholders NHS Consultant partners Spire teams • Spire sought to maximise its • Key to our strategy • Overhauled operational service to the NHS in all sites communications • Faced the brunt of COVID on • Over 120,000 NHS patients the front line • Ryalto app f
Slide 24: Engaging with our teams – delivered improvement in engagement
Engaging with our teams – delivered improvement in engagement 80% 86% Up 1% Up 2% 2019 2019 Are happy with the STANDARD OF CARE if Are PROUD to work for Spire Healthcare friends or family needed treatment 24
Slide 25: Fast tracking change to strengthen our capabilities
Fast tracking change to strengthen our capabilities Digital Operational • 20,000 virtual consultations in H1 20 • Gold / Silver / Bronze ways of working and • Hospital Management System communication • Improved KPI reporting • ePOA • Florence – oracle-based people management • Pathology testing capa
Slide 26: Re-starting our business – navigating out of lockdown
Re-starting our business – navigating out of lockdown De-escalation Prioritisation Building private pipeline • Safe restart of elective • Implement digital • Call handling improved work development • Limited targeted marketing • Investment in patient • Pricing system activity pathways • Cost reducti
Slide 27: Spire target market less anxious than UK population on average
Spire target market less anxious than UK population on average How would you feel about visiting a hospital currently, if you were in need of treatment? 9 12 17 Not at all anxious 21 25 26 20 29 28 Not that anxious 34 37 38 40 Fairly anxious 38 37 37 Extremely anxious 32 32 29 19 17 8 6 4 Don't know
Slide 28: Investing in safe patient pathways
Investing in safe patient pathways • Red, Amber, Green classifications • Robust testing regime • Clear guidance to colleagues, Consultants and patients 28
Slide 29: Patients waiting for treatment (m)
IHPN estimates that the real waiting list could be 7-13m 15.2 Forecast list pre-COVID Forecast for base case Patients waiting for treatment (m) 13.2 Forecast for bear case Forecast for bull case 11.2 9.2 7.2 5.2 3.2 Source: IHPN 29
Slide 30: Spire's weekly relevant enquiries now above prior year
Spire’s weekly relevant enquiries now above prior year 9000 2020 2019 8000 7000 6000 Enquiries 5000 4000 3000 2000 1000 0 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 Week 30
Slide 31: Anticipate self-pay activity returning to PY levels by year end
Anticipate self-pay activity returning to PY levels by year end Self-Pay New OP Consultations Self-Pay IPDC Admissions 2019 2020 2019 2020 5000 1200 4500 1000 4000 3500 800 3000 Volume Volume 2500 600 2000 400 1500 1000 200 500 0 0 Rolling 7 days to date Rolling 7 days to date 31
Slide 32: Enquiries driving recovery in PMI
Enquiries driving recovery in PMI PMI New OP Consultations PMI IPDC Admissions 6000 3000 2019 2020 2019 2020 5000 2500 4000 2000 Volume Volume 3000 1500 2000 1000 1000 500 0 0 Rolling 7 days to date Rolling 7 days to date 32
Slide 33: Total admissions now 95% of prior year
Total admissions now 95% of prior year 2019 2020 30000 25000 20000 Admissions 15000 10000 5000 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 33
Slide 34: Demand underpinned by relentless focus on patient safety
Demand underpinned by relentless focus on patient safety • 90% of sites rated Good, Outstanding or equivalent • 5 Outstanding sites • 3 sites upgraded from Requires Improvement to Good • Spire Leeds • Spire Hartswood • Spire London East • CQC inspections paused during COVID peak but now resuming 34
Slide 35: Aligning medical governance to provide further support
Aligning medical governance to provide further support • Dr. Catherine Cale will join as Group Medical Director on 26 October • A regional structure of Medical Directors for each of the three geographical business units will be introduced • Paterson Inquiry follow up ongoing 35
Slide 36: Summary
Summary Built capability, We are well We have managed leveraging learnings positioned to get Demand is coming well in challenging and focused on back on track to back times relaunching our deliver long term business growth 36
Slide 37: Appendix
S2 Spire Healthcare Appendix Covking after yee
Slide 38: Technical guidance
Technical guidance Technical guidance for 2020 Operating profit H2 20 in line with H1 20, with upside potential from incentives Mix Higher proportion of NHS in the near term D&A c.£92-96m post IFRS 16 Capex c.£50m Net financing costs £82-87m post IFRS-16 Tax Effective corporate tax rate negligible f
Slide 39: Operating cost analysis
Operating cost analysis H1 20 (£m) H1 20 (% sales) H1 19 (£m) H1 19 (% sales) Clinical staff 97.1 24.2% 98.8 20.1% Direct costs 78.9 19.6% 110.7 22.5% Medical fees 29.1 7.2% 51.6 10.5% Cost of sales 205.1 51.0% 261.1 53.1% Gross profit 196.8 49.0% 230.5 46.9% 39
Slide 40: Hospital and clinic ratings from CQC, HIW and HIS
Hospital and clinic ratings from CQC, HIW* and HIS† Site Rating Site Rating Site Rating Site Rating Requires Alexandra Improvement Fylde Coast Good Methley Park Good Thames Valley Good Requires Brighton/MHL Outstanding Gatwick Improvement North Cheshire Outstanding Tunbridge Wells Good Bristol Good
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