Life Healthcare Group Holdings Limited · JSE:LHC
Life Healthcare — FY2022 Earnings Presentation
52 slides from Life Healthcare's earnings presentation, 2022
Slide 1: Audited Group results for the twelve months ended 30 September 2022
Audited Group results for the twelve months ended 30 September 2022 and final cash dividend declaration 1
Slide 2: Highlights for the year
HIGHLIGHTS FOR THE YEAR STRONG UNDERLYING OPERATING PERFORMANCE IN ALL MARKETS Paid Patient Theatre Occupancy Revenue Normalised* Southern Days (PPDs) minutes level EBITDA Africa (SA) 5.8% 14.8% 61.9% 5.0% 7.2% Alliance UK PET-CT Italian Irish Revenue Medical volumes volumes volumes Group
Slide 3: Delivering diversified revenue and lines of business
STRATEGY IN ACTION | GROWTH DELIVERING DIVERSIFIED REVENUE AND LINES OF BUSINESS Acute versus Normalised Acute versus Revenue (%) non-acute revenue (%) EBITDA (%) non-acute EBITDA (%) Southern Africa International Acute Non-acute Southern Africa International Acute Non-acute 27% 24% 28% 29% 29% 23%
Slide 4: Making life better for our patients, our people and our planet
STRATEGY IN ACTION | SUSTAINABILITY MAKING LIFE BETTER FOR OUR PATIENTS, OUR PEOPLE AND OUR PLANET AAA OUR ESG JOURNEY ENVIRONMENT MSCI ESG rating ▪ Continued Group ▪ New environmental targets: imperative ▪ 2030 - zero waste to ▪ Increased renewable landfill energy usage Level 3 ▪ 2050 - net zero em
Slide 5: Making life better: social and community healthcare
STRATEGY IN ACTION | SUSTAINABILITY MAKING LIFE BETTER FOR OUR PATIENTS, OUR PEOPLE AND OUR PLANET SOCIAL ▪ Healthcare access to indigent patients and pro bona surgery in Life hospitals Healthcare ▪ The donation of 4 mobile clinics with ophthalmic equipment bringing cataract ▪ Projects are directed
Slide 6: Strategic enabler: Technology
STRATEGIC ENABLER | TECHNOLOGY USING TECHNOLOGY TO IMPROVE CUSTOMER EXPERIENCE, EFFICIENCIES AND HEALTHCARE DELIVERY What are we doing? What is our purpose? 1 Modernising IT infrastructure Create the foundation to enable the flexibility to exploit new technologies at unit level as well as to improve
Slide 7: Southern Africa overview
SOUTHERN AFRICA OVERVIEW CEO SOUTHERN AFRICA: ADAM PYLE
Slide 8: COVID-19 update: Southern Africa
COVID-19 UPDATE | SOUTHERN AFRICA RETURNING TO A NORMALISED CASE MIX Surgical vs medical PPD mix Surgical Medical (excl. COVID) COVID 18.1% 19.3% 23.7% 7.6% 3.6% 50.3% 51.5% 49.8% 47.3% 41.6% 33.7% ▪ Recent COVID-19 waves less severe resulting in lower hospital 33.7% 31.5% admissions 50.8% 50.1% 49.
Slide 9: Acute hospitals and complementary services
FY2022 | ACUTE HOSPITALS AND COMPLEMENTARY SERVICES STRONG H2 RECOVERY DROVE FY2022 PERFORMANCE Occupancy levels Acute hospitals and complementary Combined Acute Hospitals Complementary Services services occupancy levels 69.7% 67.1% 65.4% 66.5% 74.6% 69.7% 69.2% 69.1% 59.8% 64.0% 58.5% 63.4% 61.9% 5
Slide 10: Acute hospitals
FY2022 | ACUTE HOSPITALS NORMALISING CASE MIX DRIVING PERFORMANCE Acute hospital PPDs Acute hospital revenue Revenue growth composition and change yoy (%) (R million) and change yoy (%) 15% 10.7% 50.0% 29.8% 10% 5.3% 30% 20.3% 30.0% 6.6% 20% 9.1% 5.5% 7.7% 5.8% 5.3% 5.3% 10% 0.2% 1.5% 10.0% 5% Mix c
Slide 11: Complementary services
FY2022 | COMPLEMENTARY SERVICES STRONG PERFORMANCE DELIVERING STRATEGIC GOAL OF GROWING NON-ACUTE REVENUE Complementary PPDs Complementary revenue* Renal dialysis treatments and change yoy (%) 50.0% (R million) and change yoy (%) 10% and change yoy (%) 9% 8% 7% 5.8% 19.7% 30.0% 21.6% 6% 4.5% 5.0% 4.
Slide 12: With revolutionary technology we are moving oncology forward
FY2022 | COMPLEMENTARY SERVICES WITH REVOLUTIONARY TECHNOLOGY WE ARE MOVING ONCOLOGY FORWARD Life Vincent Pallotti Hospital has acquired Ethos™ therapy, a first in SA and one of only 60 in the world. This revolutionary new oncology treatment delivery system harnesses the power of AI-driven adaptive
Slide 13: Healthcare services
FY2022 | HEALTHCARE SERVICES RESILIENT LIFE NKANYISA PERFORMANCE Healthcare services' revenue Healthcare services' normalised (R million) and change yoy (%) EBITDA (R million) and margin (%) 15% 12.2% 300 10% 6.9% 8.2% 13.4% 5% 11.8% 0% 10.0% 9.7% -5% -6.9% 200 195 -10% 1 456 FY2019 FY2020 FY2021 FY
Slide 14: Southern Africa segmental breakdown
FY2022 | SOUTHERN AFRICA SEGMENTAL BREAKDOWN 2022 2021 % change ▪ Revenue +5.0% with normalised 2022 EBITDA +7.2% from operating R'm R'm vs 2021 leverage and good operational cost Revenue 19 971 19 023 5.0 control Acute hospitals and complementary 18 615 17 567 6.0 ▪ +5.8% PPD growth and +0.1% Healt
Slide 15: Strategic initiative: Quality
STRATEGIC INITIATIVE | QUALITY SOUTHERN AFRICA Patient Adverse Event Employee Safety Rate Measures ▪ Good overall quality performance 2.8 4.5 ▪ Patient experience on par with prior years 2.6 ▪ PXM score of 8.4 4.0 ▪ Employee safety measures are improving (excluding the 2.4 3.5 impact of COVID-19) 2.
Slide 16: International overview
INTERNATIONAL OVERVIEW CEO INTERNATIONAL: MARK CHAPMAN
Slide 17: Why diagnostic imaging services?
INTERNATIONAL | WHY DIAGNOSTIC IMAGING SERVICES? INCREASING GLOBAL ROLE FOR DIAGNOSTICS MRI scans CT scans per 1 000 population per 1 000 population ▪ Ageing population, increased disease burden 120 250 ▪ Earlier diagnosis translates to 100 200 80 ▪ Better treatment and improved outcomes 60 150 100
Slide 18: AMG's unique footprint
INTERNATIONAL | AMG’S UNIQUE FOOTPRINT LEADING IMAGING AND RADIOPHARMACY PROVIDER Mature public healthcare markets with growing private sector involvement United Kingdom AMG revenue £208m EU & Other #1 private provider of AMG revenue £20m I imaging Fragmented private £3.5bn market #1 in PET-CT secto
Slide 19: Attractive markets
INTERNATIONAL | ATTRACTIVE MARKETS STRONG DEMAND DRIVING VOLUMES ACROSS MODALITIES CAGR CAGR ▪ Demand translated into strong volume growth CT and MRI NHS England CT, MRI and PET-CT PET-CT 2013-20 2013-22 annual scan activity prior to COVID-19, particularly for PET-CT scans scans 6.5% 6.3% 8 000 000
Slide 20: AMG: UK overview
UK FY2022 | INTERNATIONAL ▪ Revenue (%) 55 AMG: UK OVERVIEW ▪ Revenue (£‘m) 208 1. Mix changes 2. Change in no. of scanners 3. Change in revenue mix MRI/CT/Other PET-CT/Radiopharmacy 58% 56% 59% 61% 53% 55% PET-CT Mobiles 53% 55% 39% DI EBITDA margin 47% 45% 44% 47% 45% MRI CT PET-CT 200 42% 41% 40%
Slide 21: AMG: UK molecular imaging
FY2022 | INTERNATIONAL AMG: UK MOLECULAR IMAGING – DELIVERING OPERATING LEVERAGE Continued volume growth Utilisation driving margins PET-CT scans Total PET-CT scans / scanner 12 000 4 000 10 000 3 000 8 000 2 000 6 000 2020 Looking forward: 4 000 2021 1 000 2 000 2022 ▪ PET-CT volume growth to conti
Slide 22: AMG: UK diagnostic imaging
FY2022 | INTERNATIONAL AMG: UK DIAGNOSTIC IMAGING (DI) – GROWTH OFF A COVID-19 INFLATED BASE Growth despite 2021 benefit Utilisation impacted by COVID-19 Looking forward: Diagnostic Imaging scans Activity / scanner 35 000 ▪ CDC opportunities are an exciting 30 000 400 8 000 long-term model, may be m
Slide 23: AMG: Italy
Italy FY2022 | INTERNATIONAL ▪ Revenue (%) 27 AMG: ITALY – CONSISTENT VOLUME AND UTILISATION GROWTH ▪ Revenue (£‘m) 104 Steady volume growth Utilisation improving MRI CT Looking forward: Italian volumes 35 000 100 PETCT Scans / scanner 5000 ▪ Benefitted from additional ASL1 30 000 80 4500 4000 budge
Slide 24: AMG: Ireland
Ireland FY2022 | INTERNATIONAL ▪ Revenue (%) 13 AMG: IRELAND – SOLID GROWTH WITH CONTINUED GOVERNMENT SUPPORT ▪ Revenue (£‘m) 48 Excellent volume growth Utilisation improving MRI CT Looking forward: Ireland volumes 50 000 PETCT Scans / scanner ▪ Ireland volumes growing, may 40 000 50 10000 9000 mode
Slide 25: Case study: Community diagnostic centres
FY2022 | INTERNATIONAL £12 million investment CASE STUDY – COMMUNITY DIAGNOSTIC CENTRES Colchester CDC Payback in 6.5 years Revenue Scans [rhs] ▪ Clear policy shift to increase diagnostic services and Scans CAGR 1.4% 4 000 25 000 Revenue CAGR 7% 3 800 move them out of acute hospital setting 3 600 3
Slide 26: Looking forward: capital allocation
FY2022 | INTERNATIONAL LOOKING FORWARD – CAPITAL ALLOCATION ▪ Industry expects similar CAGR will continue across all regions ▪ Organic and new growth opportunities will require Scanner replacement cycle capital investment Scanner age (yrs) ▪ Investment in CT and replacement in MRI during 1-3 COVID-1
Slide 27: Free cash generation
FY2022 | INTERNATIONAL FREE CASH GENERATION – ALLOWS THE BUSINESS TO INVEST IN GROWTH OPPORTUNITIES 2019 2020 2021 2022 Total ▪ Delivered 61% of EBITDA as free EBITDA (GBP' m) 68.4 63.4 89.2 78.9 300 cash to repay debt and to invest Tax (as % of EBITDA) -12.5% -4.0% -3.4% -7.6% -6.8% in growth oppor
Slide 28: Strategic initiative: Quality (International)
STRATEGIC INITIATIVE | QUALITY INTERNATIONAL Year-on-year Clinical quality indicator FY2022 FY2021 FY2020 Target trend UK Patient experience (satisfied and very satisfied) 97.0% 96.7% 97.3% >90.0% Friends and family score 95.8% 95.7% 95.7% >90.0% Written patient complaints per 10 000 scans 1.6 1
Slide 29: Financial overview
FINANCIAL OVERVIEW GROUP CFO: PIETER VAN DER WESTHUIZEN
Slide 30: Results highlights
FY2022 | RESULTS HIGHLIGHTS Reported revenue NEPS from continuing +4.9% to R28.2 billion Cash generated from operations operations of -12.2% Reported normalised EBITDA of R5.0 billion to 96.4 cps R5.0 billion Corporate Net debt to Number of once off items in prior Final Robust activity growth both i
Slide 31: Results highlights
FY2022 | RESULTS HIGHLIGHTS * Acute and complementary services Audited Group results for the twelve months ended 30 September 2022 31
Slide 32: Financial statutory results
FY2022 | FINANCIAL STATUTORY RESULTS 2022 2021 % ▪ Strong overall revenue growth in SA of 5.0% R’m R’m change driven by 5.8% ppd growth, a 4.25% tariff Continuing operations increase, inclusion of imaging acquisitions Revenue 28 206 26 885 4.9 but offset by mix change of (4.1%) and reduced LHS reven
Slide 33: Segmental results
FY2022 | SEGMENTAL RESULTS CONTINUING OPERATIONS Constant 2022 2021 Southern Africa International currency (%) R’m R’m % 3 000 30% Normlalised EBITDA margin (%) Revenue 5.5 28 206 26 885 4.9 25% Normalised EBITDA (Rm) Southern Africa 5.0 19 971 19 023 5.0 2 000 20% International 4.9 7 680 7 474 2.8
Slide 34: Earnings per share
FY2022 | EARNINGS PER SHARE GROUP 2022 2021 % change Weighted average number of shares (million) 1 447 1 454 (0.5) ▪ EPS/HEPS in FY2022 EPS from continuing and discontinued operations (cents) 105.8 120.6 (12.3) ▪ Positively impacted by release of LMI HEPS from continuing and discontinued operations
Slide 35: Consolidated condensed statement of financial position
FY2022 | CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION GROUP 2022 2021 R’m R’m Non-current assets 34 454 33 367 Property, plant and equipment 15 566 14 695 ▪ Strong financial position Goodwill 13 421 13 221 ▪ Available undrawn facilities Intangible assets 3 093 3 162 of R4.4 billion at 30 S
Slide 36: Cash flow
FY2022 | CASH FLOW GROUP 2022 2021 % R’m R’m change Cash generated from operations 5 030 5 687 (11.6) Transaction costs paid (10) (35) Cash from operations (R’m) Net interest paid (587) (541) Cash generated from operations Tax paid (871) (714) Maintenance capex (1 630) (1 542) 6 000 120% Minority di
Slide 37: Debt breakdown
FY2022 | DEBT BREAKDOWN FY2021 2022 2022 Weighted avg. FY2021 FY2021 Weighted avg. cost Funding Local currency ’m R’m cost of debt % Local currency ‘m R’m of debt % (post-tax) (post-tax) Acquisition funding ZAR - - - 500 500 4.24 GBP 118 2 331 2.73 118 2 411 1.80 Capex funding - ZAR 3 717 3 717 4.80
Slide 38: Debt repayment schedule
FY2022 | DEBT REPAYMENT SCHEDULE Balance at Maturing in Maturing in Maturing in Maturing in Maturing in R’m 30 Sep 2022 FY2023 FY2024 FY2025 FY2026 FY2027 or later Bank debt 10 855 (522) (1 564) (7 944) (314) (511) Lease liabilities 2 495 (704) (393) (217) (227) (954) Total debt 13 350 General banki
Slide 39: Dividend
FY2022 | DIVIDEND ▪ The Board approved a final gross cash dividend of 25 cents per ordinary share for the year ended 30 September 2022, bringing the total dividends paid during FY2022 to 40 53.0 cents per ordinary share (up 60% versus FY2021) 50.0 Interim Final ▪ The Group’s dividend policy remains
Slide 40: Growth strategy and outlook
GROWTH STRATEGY AND OUTLOOK GROUP CHIEF EXECUTIVE: PETE WHARTON-HOOD
Slide 41: Good cash generation facilitates growth
STRATEGIC INITIATIVES | GROWTH GOOD CASH GENERATION FACILITATES GROWTH ▪ Generated 50% of EBITDA as free cash after working capital, tax and maintenance capex ▪ Maintenance capex sustains and differentiates us: ▪ Improve efficiencies (digital scanners) ▪ Improve clinical outcomes (new technology) ▪
Slide 42: Outlook: driving our 2026 strategy
OUTLOOK | DRIVING OUR 2026 STRATEGY Revenue - SA and International 30 000 40% 25 000 24% 27% 24% 28% 29% 29% 30% ▪ We already have an integrated model 20 000 R' million 15 000 20% 10 000 ▪ Differentiated capabilities 7% 10% 4% 5 000 1% 0 0% ▪ Inflationary headwinds offset by strong volume FY2019 FY2
Slide 43: Outlook: sustainable growth in 2023 and beyond
OUTLOOK | SUSTAINABLE GROWTH IN 2023 AND BEYOND Southern Africa International ▪ Organic volume growth ▪ Organic volume growth Grow existing 1 businesses ▪ Renal and other VBC ▪ Strengthening partnerships products with NHS including CDCs ▪ Oncology ▪ Explore new markets 2 Build new offerings ▪ Imagin
Slide 44: Outlook: FY2023
OUTLOOK | FY2023 Current operations Exciting growth opportunities ▪ Current trend supports increased activities ▪ Further select acquisitions of non-clinical and higher occupancies in SA. Growth of operations in imaging between 5%-6% in ppds for H1-2023 ▪ Establish radiopharmacy business in SA ▪ Gov
Slide 45: Questions?
QUESTIONS? Life sectica
Slide 46: Annexures
ANNEXURES Life sectica
Slide 47: FY2023 outlook: Southern Africa
FY2023 OUTLOOK | SOUTHERN AFRICA MANAGING INFLATIONARY PRESSURES SA CPI and repo rate SA CPI SA repo rate Revenue protection: 25.0 ▪ Tariff increases with funders CPI -0.5 to -1.0% 20.0 ▪ Volume growth 15.0 ▪ Increased drug and consumable prices passed on 10.0 5.0 % of costs Change relative to CPI M
Slide 48: FY2023 outlook: International
FY2023 OUTLOOK | INTERNATIONAL MITIGATION OF INFLATIONARY PRESSURES UK CPI (% change yoy) 30 Revenue protection: 25 ▪ Pass pricing on to private sector payors 20 15 ▪ Public sector funders may provide tariff relief 10 10.1 % of AMG % of revenue Public sector support Mitigation 5 revenue from public
Slide 49: Strategy overview: our unique diversified offering
STRATEGY OVERVIEW OUR UNIQUE DIVERSIFIED OFFERING Southern Africa International ▪ 66 healthcare facilities ▪ Leading provider of imaging services to ▪ 8 271 hospital beds governments across the ▪ 598 mental health beds United Kingdom, Italy and Ireland ▪ 445 renal dialysis stations ▪ 147 MRI scanner
Slide 50: AMG: Overview
FY2022 | INTERNATIONAL AMG: OVERVIEW UK Italy Ireland Other geographies ▪ DI1 static sites 33 Spain Netherlands Germany Finland ▪ PET-CT national ▪ Owned clinics 37 contract sites 40 ▪ Static sites 6 ▪ Operating sites 26 ▪ Mobiles 52 ▪ Cyclotron site 1 Poland Norway Switzerland Austria ▪ Cyclotron s
Slide 51: AMG: Performance in pound sterling
FY2022 | INTERNATIONAL AMG: PERFORMANCE IN POUND STERLING Underlying revenue and normalised EBITDA growth from: ▪ Robust growth in PET-CT scan FY2021 2022 % chg FY2021 2022 % chg volumes in the UK 2022 2022 ▪ Strong growth across Ireland GBP'm GBP'm vs 2021 R'm R'm vs 2021 ▪ Increasing demand for CT
Slide 52: Our environmental, social and governance journey
OUR ENVIRONMENTAL, SOCIAL AND GOVERNANCE JOURNEY MAKING LIFE BETTER FOR OUR PATIENTS, OUR PEOPLE AND OUR PLANET GOVERNANCE ▪ Refinement of governance processes across the Group in-line with King IV Board Composition Board Age Board Tenure ▪ Independent Board with 11 2 independent non-executives 3 Wh
Life Healthcare Group Holdings — FY2022 Earnings Presentation on 6ix