Healius Limited · ASX:HLS
Healius — H1 2021 Earnings Presentation
34 slides from Healius's earnings presentation, Feb 24, 2021
Slide 1: 1H 2021 Results
1H 2021 Results Half Year ended 31 December 2020 24 February 2021
Slide 2: 1H 2021 overview
1H 2021 overview Results Current trading 1H 2021 underpinned by Pathology’s strong trading Strong trading in Pathology with elevated COVID Sustainable Improvement Program (SIP) delivering further savings Rebounding Imaging revenue in Victoria Balance sheet Margin expansion Strong balance s
Slide 3: Group results
Group results Group Underlying1 Reported2 $m 1H 2021 1H 2020 1H 2021 1H 2020 Revenue 953.5 817.4 943.8 815.9 EBIT 136.6 63.3 141.9 43.1 NPAT (continuing operations) 75.6 26.1 73.8 72.9 NPAT (inc. discontinued operations) 62.8 66.3 Underlying revenue up 16.7% and NPAT up 190% on pcp • Underpinned by
Slide 4: Divisional results
Divisional results tthealius
Slide 5: Pathology
Pathology Underlying 1H 2021 1H 2020 Better/ $m $m (worse) % Revenue 711.4 583.0 22.0 EBITDA 209.2 124.7 67.8 Depreciation (78.7) (69.1) (13.9) Amortisation (3.6) (3.0) (20.0) EBIT 126.9 52.6 141.3 Total capital expenditure 17.4 23.9 27.2 Revenue up 22% and EBIT up 141% on pcp • Strong COVID-19 volu
Slide 6: Imaging
Imaging Underlying Better/ 1H 2021 1H 2020 $m $m (worse) % Revenue 200.4 201.8 (0.7) EBITDA 38.8 46.6 (16.7) Depreciation (23.3) (22.2) (5.0) Amortisation (1.3) (1.1) (18.2) EBIT 14.2 23.3 (39.1) Total capital expenditure 4.3 7.2 40.3 Revenue down 1% and EBIT down 39% • Revenue and EBIT impact large
Slide 7: Day Hospitals/IVF
Day Hospitals/IVF Underlying 1H 2021 1H 2020 Better/ $m $m (worse) % Revenue 41.8 34.4 21.5 EBITDA 10.4 3.2 225.0 Depreciation (4.4) (4.1) (7.3) Amortisation (0.3) (0.2) (50.0) EBIT 5.7 (1.1) n.a. Total capital expenditure 2.4 1.0 (138.1) Significant turnaround in performance, revenue up 22% and EBI
Slide 8: Corporate
Corporate Underlying Better/ 1H 2021 1H 2020 $m $m (worse) % Revenue 2.3 0.0 n.a. EBITDA (4.8) (7.0) 31.4 Depreciation (3.7) (3.2) (15.6) Amortisation (1.7) (1.3) (30.8) EBIT (10.2) (11.5) 11.3 Total capital expenditure 3.4 7.1 52.1 Support and corporate services • Significant steps taken to achieve
Slide 9: Trading update
Trading update Continued strong trading in pathology and day hospitals and rebounding imaging revenue in Victoria • Pathology: o Strong revenue growth continuing through January and February driven by both COVID testing and non- COVID revenue. Non-COVID revenue ahead of pcp on a working day basis o
Slide 10: Strategy Delivery
f Strategy Delivery tthealius
Slide 11: Strategic priorities
Strategic priorities On-going progress Timeline Nov 2018 Montserrat Day Hospital acquisition 1 Portfolio Management SIP stage I commenced targeting $70m p.a. Jul 2019 Portfolio re-alignment to deliver better return and growth profile with in cost saving in 3 years the successful medical centres di
Slide 12: Strategic priorities
Strategic priorities On-going progress Timeline Nov 2018 Montserrat Day Hospital acquisition 1 Portfolio Management SIP stage I commenced targeting $70m p.a. Jul 2019 in cost saving in 3 years 2 Sustainable Improvement Program (SIP) Completion of support services operating Nov 2019 model restructure
Slide 13: SIP 1H21: Savings
SIP 1H21: Savings $23 million in-half savings and $58 million in annualised run-rate savings Key Initiatives Total 23 Regional lab rationalisation Support role consolidations Pathology 13 ACC footprint consolidation Management redundancies and outsourcing Group Services 7 Rationalisation o
Slide 14: Cost management
Cost management Benefits of SIP and cost control showing through in the cost baseline Highlights EBIT 952 +229% Revenue Substantially increased business activities due to 142 EBIT COVID-19 testing volumes 816 +16.7% 43 117 Depreciation and amortisation +12.3% Leases in holdover at 30 June now re
Slide 15: SIP stage II progress
SIP stage II progress Clear pipeline of initiatives with delivery in multiple phases Pathology Imaging Embed digital and data across processes Design Digitisation design Design Modular roll-out of underway – 1st phase Digital and Simplify: one way and best way digitised processes go-live expecte
Slide 16: Cash flow, gearing & dividend
Cash flow, gearing & dividend
Slide 17: Capital management strategy
Capital management strategy Capital management review undertaken in November to reduce cost of funding and improve returns Capital management review Terms of reference Outcomes Consider options to deploy Medical Centre sales Up to $200m to be returned to shareholders through on- proceeds market
Slide 18: Capital position
Capital position Strong balance sheet and operating cash flows and reduction in capital demands from continuing operations Flexible balance sheet – room to Increasing cash generation Reduction in capital requirements accommodate growth investments Operating Free cash flow1 Capital Expenditure Net de
Slide 19: Net debt and dividend
Net debt and dividend Reported As at $m 31 Dec 2020 30 Jun 2020 Bank and finance debt 222.0 810.1 Cash (63.7) (144.5) Net debt 158.3 665.6 Bank gearing ratio (covenant <3.5x)1 0.7x 2.7x Bank interest ratio (covenant >3.0x) 6.3x 8.9x Gearing (net debt: net debt + equity) 7.3% 25.6% Gearing $459 mil
Slide 20: Appendix: Healius Group today
Appendix Healius Group today
Slide 21: A specialist diagnostic and day hospitals business with leading market positions
A specialist diagnostic and day hospitals business with leading market positions and scalable platforms Pathology Imaging Day Hospitals • Scale player in mature market (#2) • Scale player in growing market (#3) • History of profitable growth in Montserrat • 1 in 3 pathology samples tested in • 3m+ r
Slide 22: A market leading network
A market leading network Australia-wide coverage 17 Total Sites 639 Total Sites 2,335 Total sites 17 213 Total Sites 31 602 6 2,185 2,089 ACCs Pathology 96 Laboratories v 43 Total Sites 202 5 6 756 Total Sites 37 6 15 15 Montserrat ACT Day Hospitals 4 IVF clinics 36 Total Sites 698 56 2 33 3 135 30
Slide 23: Appendix: Reconciliations
Appendix ' Reconciliations tthealius
Slide 24: Divisional Reconciliation
Divisional Reconciliation Underlying EBIT 1H 2021 Pathology Imaging Day Hospitals Corporate Group1 $m Revenue 711.4 200.4 41.8 2.3 953.5 EBITDA 209.2 38.8 10.4 (4.8) 253.6 Depreciation (78.7) (23.3) (4.4) (3.7) (110.1) Amortisation (3.6) (1.3) (0.3) (1.7) (6.9) EBIT 126.9 14.2 5.7 (10.2) 136.6 1H 20
Slide 25: Day Hospitals Reconciliation
Day Hospitals Reconciliation 1H 2021 Day Hospitals Montserrat HLS DS IVF $m Total Revenue 22.7 7.7 11.4 41.8 EBITDA 8.1 0.6 1.7 10.4 Depreciation (3.1) (0.4) (0.9) (4.4) Amortisation (0.2) 0.0 (0.1) (0.3) EBIT 4.8 0.2 0.7 5.7 Total capital expenditure 1.9 0.1 0.4 2.4 1H 2020 Day Hospitals Montserrat
Slide 26: Underlying v reported reconciliation
Underlying v reported reconciliation 1H 2021 Discontinued Hedge Close Out Reported Strategic Projects Other Underlying $m Operations Costs EBIT 141.9 (10.2) 3.8 1.1 136.6 Interest (36.2) 7.6 (28.6) PBT 105.7 108.0 Income Tax benefit/(expense)1 (31.9) (32.4) NPAT continuing operations 73.8 75.6 NPAT
Slide 27: Cash flow bridge
Cash flow bridge 672 46 98 17 460 285 34 251 19 20 593 -81 Gross Tax Operating Maintenance Growth capex Proceeds Cash flow Interest Lease Dividend Repayment Net decease operating cash flow capex from sale1 after investing payments and share of borrowings in cash cash flow buy back OCF $251.2 milli
Slide 28: Tax case 2003-2007
Tax case 2003-2007 • Healius was advised in 2015 by the Commissioner of Taxation (“the Commissioner”) that lump sum payments made by it to healthcare practitioners for the financial years 2010 to 2014 were tax deductible • Healius subsequently filed an application for similar tax deductions for the
Slide 29: AASB 16: Key impacts 1H 2021
AASB 16: Key impacts 1H 2021 AASB 16, which removes the distinction between operating and finance leases, was adopted on 1 July 2019. It has no economic impact on Healius, nor on its covenants, cash flows or shareholder value. The financial impacts are as follows: • On the P&L, interest and deprecia
Slide 30: AASB 16: Key impacts 1H 2021
AASB 16: Key impacts 1H 2021 P&L 1H 2021 1H 2021 $m $m Property & other expenses 98.8 Operating lease expense reversed EBITDA 98.8 Depreciation (90.4) Depreciation of right of use asset recognised EBIT 8.4 Finance costs (15.9) Interest paid on lease liability recognised Profit before tax (7.5) Tax @
Slide 31: AASB 16: Key impacts 1H 2021
AASB 16: Key impacts 1H 2021 Cash Flow 1H 2021 1H 2021 $m $m Gross cash flows from operating activities 118.5 Operating lease payments reversed from gross operating cash flows Net cash provided by operating activities 118.5 Interest paid on lease liabilities (20.6) Payments of lease liabilities (97.
Slide 32: AASB 16: Key impacts going forward
AASB 16: Key impacts going forward Key P&L Description Illustration Forward Outlook P&L Impact Impact Driver • Interest reduces over time as • Operating lease lease liability reduces NEW payments previously P&L impact will reverse LEASES recognised as an • AASB 16 Less favourable to as the interest
Slide 33: Disclaimer
Disclaimer This presentation has been prepared by Healius Limited (ACN 064 530 516) (‘HLS’). Material in this presentation provides general background information about HLS which is current as at the date this presentation is made. Information in this presentation remains subject to change without n
Slide 34: tihealius
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