Netcare Limited · JSE:NTC
Netcare — H1 2023 Earnings Presentation
34 slides from Netcare's earnings presentation, May 2023
Slide 1: Netcare Limited Unaudited Interim Group Results
Netcare Limited Unaudited Interim Group Results for the 6 months ended 31 March 2023
Slide 2: Netcare's unique ecosystem of assets and services
Netcare’s unique ecosystem of assets and services 49 14 acute hospitals mental health hospitals 9 903 Netcare Netcare 1 007 beds Hospitals Akeso beds 12 day clinics 65 86 Netcare 911 Netcare primary Netcare 911 sites Medicross healthcare facilities 9 cancer care centres providing radiation treatment
Slide 3: Ongoing strengthening of operational performance and traction on strategic projects
Ongoing strengthening of operational performance and traction on strategic projects Improving performance e Group p revenue e ahead d off Strong g operating g leverage e Strong g balance e sheett and d drivenn byy recoveryy in n pre-pandemic as occupancies recover. cash h generation activityy and d
Slide 4: Ongoing recovery in financial performance
Ongoing recovery in financial performance EBITDA Adjusted Interim Net debt / Revenue EBITDA1 margin2 HEPS dividend EBITDA R 11 537m R 2 015m 19.1% 46.3 cents 30.0 cents 1.2x ▲ 11.9% ▲ 24.0% ▲ 220 bps ▲ 31.5% ▲ 50.0% H1 2022: 1.7x NETCARE LIMITED 1Normalised to exclude impact of exceptional items com
Slide 5: Operational overview
Operational overview NETCARE LIMITED 5
Slide 6: Robust improvement in key activity drivers
Robust improvement in key activity drivers Total patient days1 Acute hospital2 patient days Mental health patient days Primary care patient visits 1 197 691 1 079 314 118 377 792 937 ▲ 11.5% ▲ 11.3% ▲ 13.5% ▼ 2.2% 62.6% 54.1% 58.3% 55.7% 63.0% 62.6% 80% 68.3% 66.4% 70% 60% 43.0% 50% Average acute 40
Slide 7: Hospital and emergency services
Hospital and emergency services Rm 31 Mar 2023 31 Mar 2022 % A stronger finish after a slow start Revenue 11 226 10 008 12.2 EBITDA1 1 937 1 554 24.6 Operating profit1 1 348 1 018 32.4 EBITDA margin (%) 17.3 15.5 5.5 Operating profit margin (%) 12.0 10.2 0.2 Revenue Margin Accreditation ditation and
Slide 8: Primary care
Primary care Rm 31 Mar 2023 31 Mar 2022 % Revenue 317 309 2.6 EBITDA 78 71 9.9 Operating profit 34 25 36.0 EBITDA margin (%) 24.6 23.0 Operating profit margin (%) 10.7 8.1 Revenue Margin ▼ 2.2%% medicall and d dentall n ▲160 Margin 0 basiss points patientt visitss on n same e store e basis EBITDA A
Slide 9: Financial review
Financial review NETCARE LIMITED 9
Slide 10: Group financial overview
Group financial overview Improving g financiall performance,, solid d financiall position n and d strong g cash h generation Improved d financiall Higherr occupancyy levelss and d performancee ass postt costt efficienciess continue e to o COVID-19 9 operating g drive e operationall leverage environm
Slide 11: Ongoing recovery as post COVID-19 operating environment normalises
Ongoing recovery as post COVID-19 operating environment normalises NETCARE LIMITED 11
Slide 12: Summarised Group statement of profit or loss
Summarised Group statement of profit or loss Rm 31 Mar 2023 31 Mar 2022 % Revenue Revenue 11 1 537 10 0 311 11.9 • Exceeding g pre-pandemicc revenue e byy 9.7% % EBITDA1 2 015 1 625 24.0 (H1 1 2019:: R10 0 520m) g profit1 Operating 1 382 1 043 32.5 EBITDA Otherr nett financiall expenses (223) (171)
Slide 13: Analysis of underlying EBITDA margin
Analysis of underlying EBITDA margin EBITDA margin (%) 19.1% Reported d EBITDAA margin n grew w byy 170 0 basiss pointss from m 0.5% 15.8% % to o 17.5% 18.6% ▲ 220 bps Strategicc costss off R127m m (H11 2022:: R112m)) which,, iff excluded,, 1.1% addss a furtherr 1.1% % (H1 1 2022:: 1.0%)) to o under
Slide 14: Headline earnings per share (HEPS)
Headline earnings per share (HEPS) Interim m dividend:: 64.8% % off adjusted d HEPS S Cents per share 31 Mar 2023 31 Mar 2022 % HEPS 44.8 31.9 40.4 Adjusted HEPS 46.3 35.2 31.5 Interim dividend 30.0 20.0 0 50.0 Dividend as % of adjusted d HEPS 64.8 56.8 Adjusted HEPS (cents) Dividends (cents) 48.0 3
Slide 15: Summarised Group statement of financial position
Summarised Group statement of financial position Rm 31 Mar 2023 30 Sep 2022 Our policy Netcare’ss policyy on n capitall structuree iss to o maintain a Assets strong statement of financial position and d to o retain n ann investmentt grade e creditt rating g while e reducing g the e costt off PPE1, g
Slide 16: Debt position
Debt position Comfortable e leverage e and d strong g cash h generation Rm 31 Mar 2023 30 Sep 2022 31 Mar 2022 Our policy Netcare’ss policyy on n capitall structure e iss to o Grosss debt1 6 638 6 374 6 769 maintainn a strong g statementt off financiall position n andd to Our an o retain policy inve
Slide 17: Debt facilities
Debt facilities Accesss to o R3.6 6 billion n cash h and d committed d facilitiess with h manageable e maturityy profile Cash h and d debtt facilitiess (Rm) Debtt maturityy profile1 (Rm) 31 1 March h 2023 1 585 1 550 1 225 1 100 1 619 Uncommitted d facilities 3 212 800 Committed d facilities Cash 30
Slide 18: Strategic Update
Strategic Update NETCARE LIMITED 18
Slide 19: Strategic update
Strategic update Continuing g a capexx lightt strategy,, with h focuss on n digitisation n and d person n centred engagementt Netcare’s strategy responds … and leverages off our unique … to create sustainable decisively to the three global ecosystem of assets and services… competitive advantage heal
Slide 20: Allocation of capital
Allocation of capital Netcare e remainss prudent in n managing g itss capitall resources Investment strategy Deployment of capital Cash generation Capital distribution • Identifying g opportunitiess • Return n on n capitall mustt • Strong g cashh generation • Dividendd policyy aimss to o linked d to
Slide 21: Investment in key strategic projects
Investment in key strategic projects in line with budget and time frame • FY Y 2023 3 finall yearr off majorr Capexx and d Opexx expenditure e on n strategicc projects • Budgetedd Opexx costss reduced d byy R18m m (R275mm to o R257m)) duee to o lowerr costss in n rolling g outt CareOn Capex Opex To
Slide 22: Digital transformation of the Netcare ecosystem progressing well
Digital transformation of the Netcare ecosystem progressing well Completing g the e digitall foundation,, upon n which h ongoing g person n centred engagementt and d data a analyticss strategyy willl be e built Netcare Hospitals Primary Care Akeso CareOn NRC NephrOn Cancer Care 30 hospitals fully Me
Slide 23: CareOn - redesigning our hospital healthcare ecosystem
CareOn - redesigning our hospital healthcare ecosystem Digitisation of our hospitals and real-time, mobile enabled clinical records integrating all aspects of healthcare delivery R50m m efficienciess achieved d vs.. R24m m budgeted d forr H1 1 2023 3 Benefitss to o patientt safety,, improved d clini
Slide 24: Introducing the new Netcare App
Introducing the new Netcare App As the digital foundation of our ecosystem nears completion, we are now embarking on the next phase of person centred engagement, that is digitally enabled and data driven, enabling improved access, ease of use and engagement across our ecosystem We are intentionally
Slide 25: Key features
Key features Netcare e 911 Appointments Online e Health h records NetcarePlus pre-admission (Summaryy off Care) productt saless Netcaree 9111 emergencyy Online e appointmentt bookingss Seamlesss andd convenientt Summaryy off Caree reportss willl bee Expandingg digitall channelss to o medicall servic
Slide 26: NetcarePlus - affordable access to Netcare's ecosystem
NetcarePlus - affordable access to Netcare’s ecosystem Slowlyy gaining g traction n in n a highlyy competitive e and d challenged d markett segment Medicall Scheme e Cover Growth h in n insured d lives 43% Benefitt Richness Medicall aid + 17% NetcarePluss 134% GapCare e Livess Volume Medicall aid No
Slide 27: Netcare Diagnostics – continuing to gain traction
Netcare Diagnostics – continuing to gain traction Partnered d withh blackk Netcaree providess 1933 Pointt off Caree Piloted d to o firstt female e owned d equipmentt and d devicess installedd inn Primary Care centre in pathologyy practice infrastructure,, logistics,, Netcare e specialised May 2023 a
Slide 28: Netcare's transformation journey
Netcare’s transformation journey Currentt Levell 3 B-BBEE E rating:: Levell 1 would d have e been n achieved d had d SANC1 nott imposed d restrictionss on n nurse e training Preferential Employee diversity Clinician training Clinician diversity ESD5 procurement R5.9 billion with black 809 persons wi
Slide 29: Africa's largest healthcare environmental sustainability programme
Africa’s largest healthcare environmental sustainability programme Substantiallyy outperforming g targetss and d ahead d off schedule Awards 31 national and international awards for environmental sustainability since 2013 Firstt phase e off ourr environmentall sustainabilityy strategyy successfullyy
Slide 30: Environmental strategy reduces reliance on national grid
Environmental strategy reduces reliance on national grid A stronger finish after a slow start Ensuring g safe,, sustainable e care e iss delivered d withoutt disruption Facilities Investment Impact • Private sector hospitals not exempt from • R589 million in capex on 204 projects since • Electricity
Slide 31: Guidance
Guidance NETCARE LIMITED 31
Slide 32: Guidance
Guidance Total patient days The Netcare Moat ▲ 6.5% % – 7.5% % vs.. FY Y 2022 Revenue ▲ 9.0% % – 12.0% % vs.. FY Y 2022 Strategic projects FY Y 2023:: R257m m opexx | R181m m capex Generator diesel costs FY Y 2023:: R165m m estimated EBITDA margin Underlying g marginss (excluding g strategicc costss
Slide 33: Thank you
Thank you Unaudited Interim Group Results for the 6 months ended 31 March 2023
Slide 34: Q&A
Q&A Unaudited Interim Group Results for the 6 months ended 31 March 2023