Healius Limited · ASX:HLS
Healius — Primary Health Care — H1 2017 Earnings Presentation
33 slides from Healius's earnings presentation, February 2017
Slide 1: 1H 2017 Results
1H 2017TO CLICK EDIT MASTER RESULTS TITLE STYLE 6 MONTHS ENDED 31 DECEMBER 2016
Slide 2: Overview
OVERVIEW PRIMARY 1H17 RESULTS Mee i HEALTH CARE LIMITED
Slide 3: Financial Summary
FINANCIAL SUMMARY Group Underlying Reported $M 1H 2017 1H 2016 1H 2017 1H 2016 Revenue 808.7 794.3 808.7 814.1 EBIT 81.9 93.9 61.1 115.1 NPAT (continuing operations) 41.9 44.3 21.1 62.1 NPAT (including MedicalDirector) 41.9 49.1 21.1 67.6 Dividend cps 4.8 5.6 As at 31/12/16 30/06/16 Gearing 25.3% 25
Slide 4: Strategic Initiatives
STRATEGIC INITIATIVES » Initiatives underway to deliver fundamental change across the Group: – HCP numbers and engagement – Diversified and expanded patient service offerings – Investment in technology and people capabilities – Growing Medical Centre, Imaging and Health & Co footprints – Pathology s
Slide 5: Financial Results
FINANCIAL RESULTS 5 1H17 RESULTS
Slide 6: Underlying Performance
UNDERLYING PERFORMANCE UNDERLYING 1H 2017 1H 2016 MOVEMENT $M $M % Revenue 808.7 794.3 1.8 New HCP contracts, EBITDA 149.9 172.5 (13.1) REIT and Imaging Depreciation and amortisation (68.0) (78.6) 13.5 equipment sale & EBIT 81.9 93.9 (12.8) leaseback impact EBITDA but deliver Finance costs (22.1) (3
Slide 7: Bridge of Reported to Underlying
BRIDGE OF REPORTED TO UNDERLYING Restructuring Non- 1H 17 & strategic recurring $M Reported initiatives items Other Underlying EBIT 61.1 9.7 10.4 0.7 81.9 Finance costs (22.1) (22.1) PBT 39.0 9.7 10.4 0.7 59.8 TAX (17.9) (17.9) NPAT 21.1 41.9 Restructuring 1H 16 & strategic Gain on ATO $M Reported i
Slide 8: Divisional Performance
DIVISIONAL PERFORMANCE UNDERLYING Medical Medical Pathology Imaging Corporate Centres BB Centres PB $M % $M % $M % $M % $M % Revenue 157.0 (5.0) 0.2 - 504.9 4.7 162.8 0.4 0.2 (66.7) EBIT 26.9 (36.0) (0.8) - 51.3 1.0 14.3 58.9 (9.8) (24.1) EBIT margin 17.1% - - - 10.2% - 8.8% - - - » Medical Centres
Slide 9: Medical Centres Performance
MEDICAL CENTRES PERFORMANCE UNDERLYING Medical Revenue down $8.3m = GP revenue and sundry Centres BB revenue (inc. THI) $M % • Overall gross GP billings stable • Reduced margin from capital-light deals Revenue 157.0 (5.0) • 70% GPs on ‘no up-front’ option in 1H 2017 • Greater GP numbers needed with
Slide 10: Cash Flow Improving
CASH FLOW IMPROVING 250 Capital spend of $61m v $103m 200 (52) $A million 150 137 (33) 6 (22) 100 (6) 24 (33) 18 15 50 82 82 79 82 - Opening cash OCF Interest & tax PPE Net HCP Other Net cash after Capital Dividends Cash Proceeds Closing cash acquisitions-1 intangibles FCF recycling -2 from borrowin
Slide 11: Free Cash Flow Comparison 1H 2017 1H 2016
FREE CASH FLOW COMPARISON 250 200 (52) $A m 150 137 (33) 1H 2017 (22) (6) 100 50 82 106 - Opening cash OCF Interest & tax PPE Net HCP acquisitions Other intangibles Net cash after FCF Interest saving from Lower HCP costs Greater FCF despite capital recycling from new models lower profit 250 20
Slide 12: Net Debt and Dividend
NET DEBT AND DIVIDEND UNDERLYING Group reported as at 31 December 16 30 June 2016 $M $M Total debt 918.2 898.3 Cash (96.8) (82.3) Net debt 821.4 816.0 Gearing (net debt: net debt + equity) 25.3% 25.2% Bank gearing ratio (covenant <3.5x) 2.53x 2.37x Interim dividend cps 4.8 5.6 » Significant improvem
Slide 13: Strategic Initiatives
STRATEGIC INITIATIVES 13 1H17 RESULTS
Slide 14: Transformation Journey Continues
TRANSFORMATION JOURNEY CONTINUES Sale & lease back of Imaging equipment Sold Primary Health Care MedicalDirector Sold Transport Health Institute signs up a Official opening of record 47 registrars Primary Corrimal Reset Dividend for 2017 intake Medical & Dental Policy at 1H16 Established Clinical Co
Slide 15: Medical Centres – Bulk Billing
MEDICAL CENTRES – BULK BILLING GP recruitment and retention – critical for success » New capital-light recruitment models essential for future » Lower revenue share offset by lower capital expenditure » Greater number of GPs required to offset reduced average contracted hours » Positive trend contin
Slide 16: Medical Centres – Bulk Billing
MEDICAL CENTRES – BULK BILLING Medical Centres remains core to Primary’s strategies » HCP and employee engagement – Improve offering to HCPs: increased support services, nurses, LIDs – Staff engagement activities » Service offering – Expand capabilities including nursing, dental, specialist staff »
Slide 17: Medical Centres – Private Billing
MEDICAL CENTRES – PRIVATE BILLING Health & Co to capture a share of private billing market » Achievements to date: – Foundation partnership with Professor Kerryn Phelps with 2 practices into H&C network – Mobilisation of digital health platforms » Future priorities: – Accelerate growth of the Health
Slide 18: Pathology
PATHOLOGY ACCs exc: HSO and Border acquisitions Mature business and cost leading structure 2,200 2,150 Increase post Government » Wes Lawrence appointed CEO of Pathology 12/2016 2,100 election ‘agreement’ » ACC strategy awaiting clarification 2,050 2,000 – Net expansion of 60 in response to market c
Slide 19: Imaging
IMAGING Progress on transformative path to optimise asset base » Realigning business portfolio to expand share of: – Hospital contracts (National Capital, Knox, Holmesglen, Northern Beaches) – Fit for purpose high-end imaging centres (Varsity Lakes, River City) – Primary’s large-scale medical centre
Slide 20: Government Position
GOVERNMENT POSITION » Frontline care critical in preventing more expensive hospital care » GP visits account for only 7%1 of total health expenditure » However, continued push to bend the cost curve and reduce frontline care funding » Industry continues to seek clarity on: – Medicare rebate freeze f
Slide 21: Outlook
OUTLOOK » Long-term drivers for healthcare remain positive with growing and ageing population, increasing chronic and complex conditions, and rising patient expectations » Large-scale multi-disciplinary clinics, such as Primary’s, are low-cost, efficient providers of care » Primary’s aim is to: – Be
Slide 22: Appendices
APPENDICES A MARKET LEADING NETWORK As at 1 February 2017 22 1H17 RESULTS
Slide 23: Reported Performance
REPORTED PERFORMANCE REPORTED 1H 2017 1H 2016 MOVEMENT $M $M % Revenue 808.7 814.1 (0.7) EBITDA 129.1 194.7 (33.7) Depreciation & amortisation (68.0) (79.6) 14.6 EBIT 61.1 115.1 (46.9) Finance costs (22.1) (30.5) 27.5 PBT 39.0 84.6 (53.9) Income tax (17.9) (22.5) 20.4 NPAT 21.1 62.1 (66.0) » HY 2017
Slide 24: Reconciliation of Reported to Underlying
RECONCILIATION OF REPORTED TO UNDERLYING Restructuring Non- 1H 17 & strategic recurring $M Reported initiatives items Other Underlying Revenue 808.7 808.7 EBITDA 129.1 9.7 10.4 0.7 149.9 Depreciation (29.4) (29.4) Amortisation (38.6) (38.6) EBIT 61.1 9.7 10.4 0.7 81.9 Finance costs (22.1) (22.1) PBT
Slide 25: Reconciliation of Reported to Underlying
RECONCILIATION OF REPORTED TO UNDERLYING Restructuring 1H 16 & strategic Gain on ATO $M Reported initiatives sale settlement Underlying Revenue 814.1 (19.8) 794.3 EBITDA 194.7 11.2 (19.8) (13.5) 172.5 Depreciation (35.7) 0.9 (34.7) Amortisation (43.9) (43.9) EBIT 115.1 12.1 (19.8) (13.5) 93.9 Financ
Slide 26: Medical Centres
MEDICAL CENTRES 1H 2017 1H 2016 MOVEMENT MOVEMENT Underlying $M $M $M % Revenue 157.0 165.3 (8.3) (5.0) EBITDA 65.4 82.7 (17.3) (20.9) Depreciation (10.7) (10.4) (0.3) 2.9 Amortisation (27.8) (30.3) 2.5 (8.3) EBIT 26.9 42.0 (15.1) (36.0) » Refer slide 9 26 1H17 RESULTS
Slide 27: Pathology
PATHOLOGY 1H 2017 1H 2016 MOVEMENT MOVEMENT Underlying $M $M $M % Revenue 504.9 482.3 22.6 4.7 EBITDA 64.6 64.2 0.4 0.6 Depreciation (9.5) (9.6) 0.1 1.0 Amortisation (3.8) (3.8) - - EBIT 51.3 50.8 0.5 1.0 » Above market revenue growth of $22.6m or 4.7% » EBIT up $0.5m with property costs up due to A
Slide 28: Pathology: Market Services and Benefits
PATHOLOGY: MARKET SERVICES AND BENEFITS Medicare benefits 12% 10% 8% 6% Long term average: 4.3% 4% Rolling 12 month 2% average: 2.8% (1.2% HY 2016) 0% -2% Dec 11 Jun 12 Dec 12 Jun 13 Dec 13 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec Services (12m rolling) Benefits (12m rolling) 28 1H17 RESULTS
Slide 29: Imaging
IMAGING 1H 2017 1H 2016 MOVEMENT MOVEMENT Underlying $M $M $M % Revenue 162.8 162.1 0.7 0.4 EBITDA 27.7 30.4 (2.7) (8.9) Depreciation (7.8) (13.9) 6.1 43.9 Amortisation (5.6) (7.5) 1.9 25.3 EBIT 14.3 9.0 5.3 58.9 » Strong performance with increased EBIT and margin expansion » Stable revenue: – Conti
Slide 30: Imaging: Market Services and Benefits
IMAGING: MARKET SERVICES AND BENEFITS 12% Medicare benefits 10% 8% Long term average: 6.5% 6% 4% Rolling 12 month average: 3.8% 2% (3.3% HY 2016) 0% Dec 11 Jun 12 Dec 12 Jun 13 Dec 13 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Services (12m rolling) Benefits (12m rolling) 30 1H17 RESULTS
Slide 31: Corporate
CORPORATE 1H 2017 1H 2016 MOVEMENT MOVEMENT Underlying $M $M $M % Revenue 0.2 0.6 (0.4) (66.7) EBITDA (7.0) (4.8) (2.2) (45.8) Depreciation (1.4) (0.8) (0.6) (75.0) Amortisation (1.4) (2.3) 0.9 39.1 EBIT (9.8) (7.9) (1.9) (24.1) » Corporate costs up 24% » Increased investment in new capabilities to
Slide 32: Tax Implications of HCP Acquisitions
TAX IMPLICATIONS OF HCP ACQUISITIONS » Healthcare Practitioners acquired on or after 1 July 2015: – Deferred tax liability (DTL) to be recognised at the time of the acquisition of healthcare practices and capitalisation of contractual relationship intangible assets. – Equal movement in DTL will ensu
Slide 33: Disclaimer
DISCLAIMER » This presentation has been prepared by Primary Health Care Limited (ACN 064 530 516) (‘PRY’). » Material in this presentation provides general background information about PRY which is current as at the date this presentation is made. Information in this presentation remains subject to