Integrated Diagnostics Holdings Plc · LSE:IDHC
Integrated Diagnostics — FY2020 Earnings Presentation
49 slides from Integrated Diagnostics's earnings presentation, May 2021
Slide 1: IDH Results Presentation May 2021
IDH Results Presentation May 2021
Slide 2: Contents
Contents: • IDH At a Glance • FY 2020 Results Overview • Key Investment Highlights • Our Market • Our Business Model • Financial Position and Performance • Growth Strategies • Governance 2 INTEGRATED DIAGNOSTICS HOLDINGS
Slide 3: Who We Are
Who We Are Integrated Diagnostics Holding is a leading, fully-integrated provider of high-quality medical diagnostic services with a footprint spanning Egypt, Jordan, Sudan and Nigeria Our Services Our Brands Accreditations Immunology Radiology Hematology Clinical Molecular Endocrinology Chemistry B
Slide 4: Our Geography
Our Geography IDH’s branch network of 481 labs at year-end 2020 spans 4 countries, the largest of which is Egypt 20 The Company’s Egyptian operations contributed branches 84% of consolidated revenues in 9M2020 429 Jordan Branches EGYPT Egypt 81.8% 1979 FY 2020 Cairo Region 49% Upper Egypt Region 16%
Slide 5: Our Patients
Our Patients IDH serves two principal types of patients: contract and walk-in Around 70% of total revenue generated across the two segments is paid in cash Contract Patients Walk-In Patients IDH’s contract clients include institutions who enter into one-year IDH’s walk-in clients, also referred to a
Slide 6: FY 2020 Results Overview
FY 2020 Results Overview 6 INTEGRATED DIAGNOSTICS HOLDINGS
Slide 7: Results Snapshot
Results Snapshot Group records strong top- and bottom-line growth in 2020 despite the challenges related to Covid-19 EGP 2,656 mn EGP 1,343 mn EGP 1,171 mn EGP 609 mn Revenue in FY 2020 Gross Profit in FY 2020 EBITDA in FY 2020 Net Profit in FY 2020 ▲ 19% y-o-y ▲ 24% y-o-y / 51% margin ▲ 24% y-o-y /
Slide 8: 2020 in Review
2020 in Review Despite the exceptional difficulties faced throughout 2020, IDH leveraged its flexible business model and adaptive service offering to deliver strong growth and robust profitability IDH Revenues Evolution | EGP mn Volumes and revenues weighed down by restrictive measures in the IDH ad
Slide 9: Strong Top-line Growth in 2020
Strong Top-line Growth in 2020 IDH once again demonstrated its ability to adapt to changing market dynamics and successfully transformed an incredibly difficult operational environment into an opportunity to deliver new value to its patients while growing its business IDH Revenues | EGP mn IDH Avera
Slide 10: Strong Group Profitability in 2020
Strong Group Profitability in 2020 Gross profit margin expanded to 51%, supported by strong top-line growth and lower COGS as a percentage of sales; EBITDA margin up despite higher provisions IDH COGS Breakdown | EGP mn / % of Revenue IDH Consolidated Gross Profit | EGP mn / % +15% +24% Gross profit
Slide 11: Robust Bottom-line Growth in 2020
Robust Bottom-line Growth in 2020 Revenue growth trickled down to the Group’s bottom-line which expanded 21% year-on-year in FY 2020 with a stable margin versus last year IDH Interest Expenses| EGP mn / % of Revenue IDH Taxes | EGP mn / % of Revenue +11% The increase in IDH’s +21% effective tax rate
Slide 12: Solid Financial Position
Solid Financial Position The Group maintains a robust financial position, with a liquid balance sheet thanks to a strong cash generation profile allowing for consistent dividend payouts Consolidated Cash Balance | EGP mn Net Cash Balance* | EGP mn IDH’s cash balances +39% +78% increased to EGP 877 N
Slide 13: Segment Performance
Segment Performance During 2019 management had analysed the segmentation of Egypt’s patient base leading to a reclassification between walk-ins and contract volumes. Contract Segment** Walk-In Segment Total FY2019* FY2020 Change FY2019* FY2020 Change FY2019* FY2020 Change Revenue^ (EGP ‘000) 1,252 1
Slide 14: Segment Performance
Segment Performance Revenue and patient mix normalized from higher campaign-related contract volumes last year Revenue Split Patient Split FY 2019 FY 2020 FY 2019 FY 2020 27% 32% 40% 46% 54% 60% 68% 73% Walk-in Corporate Walk-in Corporate Walk-in Corporate Walk-in Corporate 14 INTEGRATED DIAGNOSTICS
Slide 15: Regional Performance
Regional Performance Local currency revenue expanded in Jordan, Nigeria and Sudan as restrictions were lifted and traffic normalized in the second half of the year Revenues | EGP mn EBITDA* | EGP mn / % EGYPT ▲14% ▲19% In Egypt revenues expanded 14% y-o-y supported by IDH’s ramped-up house call 2,17
Slide 16: COVID-19-adapted Service Offering
COVID-19-adapted Service Offering Top-line growth in Egypt and Jordan was supported by IDH’s Covid-19-related* test offering and its ramped-up house call service, both of which continue to witness strong demand in both countries Covid-19 Testing Contribution to IDH Revenue FY20 House Call Contributi
Slide 17: Continued Ramp up at Al Borg Scan
Continued Ramp up at Al Borg Scan EGP 25.0 MN EGP 4.8 MN EGP 546 EGP 690 Al Borg Scan offers a full range of radiology services, including but not limited to (19% margin) Magnetic Resonance Imaging (MRI), Computed Tomography (CT), Ultrasound, X-ray and Mammograms. FY2020 Revenue FY2020 EBITDA FY2020
Slide 18: Investment Highlights
Investment Highlights 18 INTEGRATED DIAGNOSTICS HOLDINGS
Slide 19: Investment Highlights
Investment Highlights IDH is an attractive investment opportunity with compelling fundamentals, present in fast- growing, under-served markets Operating in highly fragmented markets characterised by 1 strong structural growth drivers and high barriers to entry Deploys an asset-light business model t
Slide 20: Fast-Growing, Underserved Markets
Fast-Growing, Underserved Markets 20 INTEGRATED DIAGNOSTICS HOLDINGS
Slide 21: Favorable Industry Dynamics
Favorable Industry Dynamics IDH’s home market of Egypt is underpinned by robust structural growth drivers Lab tests per capita (2012) 23.2 High Disease Burden Operating in a still under-penetrated The Egyptian population is marked by a high incidence of market 10.1 lifestyle-related medical conditio
Slide 22: Favorable Industry Dynamics
Favorable Industry Dynamics IDH’s markets are characterised by high barriers to entry Economies of Scale Accreditation of Facilities Brand & Reputation Market Reach Key Stakeholder Relationships IT-enabled platform, Attracting patients Patients are loyal to Fragmented markets Building a scalable cri
Slide 23: IDH is a Consumer-Facing Service Provider
IDH is a Consumer-Facing Service Provider The mechanics of healthcare markets in developing economies are markedly different from those in many Western healthcare industries Private Healthcare Systems in Developing Economies IDH serves the private healthcare A hospital outpatient clinic or Perceived
Slide 24: Scalable Business Model
Scalable Business Model 24 INTEGRATED DIAGNOSTICS HOLDINGS
Slide 25: Asset-light Business Model
Asset-light Business Model IDH’s “Hub, Spoke and Spike” business model enables the Company to organically expand its reach in highly-fragmented markets with underserved diagnostic services demand Mega Lab: “Hub” • The Mega Lab, the largest automated lab in Egypt, serves as IDH’s diagnostic “Hub,” eq
Slide 26: Our Mega Lab
Our Mega Lab IDH’s Mega Lab provides a robust platform to support rapid, cost-effective growth Capabilities Quality Control • Mega Lab machines are capable of conducting a wide range of tests including basic blood grouping to advanced gene sequencing. • New and esoteric test facilities at the Mega L
Slide 27: Key Supplier Relationships
Key Supplier Relationships IDH leverages its bargaining power with suppliers to maximize value in a business that is fundamentally about economies of scale Dynamics of Supplier Relationships • IDH engages in re-agent deals whereby the majority of its testing equipment is provided at no upfront payme
Slide 28: Strong Growth and Financial Position
Strong Growth and Financial Position 28 INTEGRATED DIAGNOSTICS HOLDINGS
Slide 29: Key Financial Performance Indicators
Key Financial Performance Indicators Since the Company’s IPO on the LSE in 2015, IDH has delivered consistent top- and bottom-line growth supported by a steady increase in volumes and increasingly favourable pricing across the Group’s service offering Revenue | EGP mn - CAGR Gross Profit - GPM | EGP
Slide 30: Regional Performance
Regional Performance Across its footprint, the Company deploys tailored expansion strategies which enable it to continue driving growth irrespective of the prevailing macroeconomic environment Share of 2020 Revenue Revenues (EGP mn) IDH is in a strong competitive position in the ▲14% Egyptian diagno
Slide 31: Growth Strategies
Growth Strategies 31 INTEGRATED DIAGNOSTICS HOLDINGS
Slide 32: Future Growth Strategies
Future Growth Strategies IDH’s growth strategies rely on leveraging its competitive advantages to achieve four strategic goals Expand Customer Expand Reach Geographically In addition to organic expansion, the Company Beyond opening laboratories in new continues to seek value-accretive acquisitions g
Slide 33: Expanding Customer Reach – IDH Awareness Campaigns
Expanding Customer Reach – IDH Awareness Campaigns Parallel to state-sponsored initiatives, IDH also runs its own awareness campaigns focusing on specific diseases on a monthly basis and offering discounts on related testing IDH’s PCR Offers and Campaigns Discounts on PCR testing for Covid-19 PCR te
Slide 34: Expanding Customer Reach – State-sponsored Initiatives
Expanding Customer Reach – State-sponsored Initiatives IDH’s nationwide presence and strong brand equity position it well to benefit from state- sponsored campaigns to increase awareness of preventative healthcare with diagnostic testing Duration Revenue Generated “100 Million Healthy Lives” campaig
Slide 35: Expand Customer Reach – House Call Services
Expand Customer Reach – House Call Services IDH’s house call services, offered in both Egypt and Jordan, enable the Company to provide its services to patients’ doorstep at the touch of a screen Expands IDH’s customer base Expands reaching new segments of the House call services witnessed rising dem
Slide 36: Diversifying Service Offering – Al Borg Scan Expansion Updates
Diversifying Service Offering – Al Borg Scan Expansion Updates In February 2020, operations commenced at Al Borg Scan’s second branch in Cairo. The Group is actively working towards obtaining ACR (American College of Radiology) accreditation for Al Borg Scan’s branches, a process it expects to concl
Slide 37: Diversifying Service Offering – New Investment in Wayak
Diversifying Service Offering – New Investment in Wayak IDH launches new subsidiary “Wayak” to offer data-driven healthcare services, utilising data analytics and artificial intelligence to capitalise on IDH’s database of over c.13 million patients Wayak Services Medication to be Service provider On
Slide 38: Growing Geographic Footprint– Investment Rationale
Growing Geographic Footprint– Investment Rationale IDH’s regional expansion strategy targets acquisitions in African, Middle Eastern and Asian markets where it can deploy its proven business model and generate accretive value Growing economies and strong demographics Similar healthcare market struct
Slide 39: Growing Geographic Footprint – Nigeria Expansion
Growing Geographic Footprint – Nigeria Expansion In December 2017, IDH further expanded its geographical footprint with an investment in Nigeria, a value-accretive acquisition in a large, fragmented and underpenetrated diagnostic services market where our business model is well-suited to capitalise
Slide 40: Nigeria Expansion Updates
Nigeria Expansion Updates Operational progress in Nigeria expansion with existing branches being refurbished and renovated and with loss-making branches being relocated or closed. In parallel, the Group is actively seeking to optimise its offering, pushing its radiology and pathology services. Branc
Slide 41: Nigeria Branch Roll-Out and Renovations
Nigeria Branch Roll-Out and Renovations Opebi Branch Renovation and Rebranding New Victoria Island Branch Area 11 Branch Renovation and Rebranding Benin Branch Renovation & Rebranding 41 INTEGRATED DIAGNOSTICS HOLDINGS
Slide 42: Strong Leadership & Governance
Strong Leadership & Governance 42 INTEGRATED DIAGNOSTICS HOLDINGS
Slide 43: Governance
Governance A World-Class Board of Directors The majority of members of IDH’s Board of Directors are independent and offer significant experience in the healthcare market, MENA region and investment activities Lord St John of Bletso 1 Prof. Dr. Hend El Sherbini Hussein Choucri 1,2,3,4 Independent Non
Slide 44: Governance
Governance IDH is committed to implementing best practices in corporate governance through the expertise of both the individual Directors and outside parties Internal Audit Procedures While not required to comply Anti-Bribery and Anti Corruption Policy (ABAC) with UK Corporate Governance The Board
Slide 45: Sustainability
Sustainability Founded on the principle of providing quality medical assistance and services to better the lives of individuals and the community at large, IDH views corporate responsibility initiatives as an extension of its core purpose with the aim of improving communities in which it does busine
Slide 46: Appendix
Appendix 46 INTEGRATED DIAGNOSTICS HOLDINGS
Slide 47: IDH Development Story
IDH Development Story Over 40 years of industry experience, complemented by strategic expansion to develop a strong market position across products and geographies. Today IDH has built a scalable platform that is positioned for further strong growth 1979 1990 2008 2011 2012 Establishment of MK Lab A
Slide 48: Covid-19 Internal Protocols and Preventative Measures
Covid-19 Internal Protocols and Preventative Measures In light of the recent covid-19 global outbreak, IDH, in line with World Health Organization (WHO) guidelines, has implemented detailed internal protocols to guarantee the safety of its staff and patients and safeguard its operations. IDH’s respo
Slide 49: IDH
INTEGRATED DIAGNOSTICS HOLDINGS IDH
Integrated Diagnostics Holdings — FY2020 Earnings Presentation on 6ix