Sonic Healthcare Limited · ASX:SHL
Sonic Healthcare — Investor Presentation (May 2002)
24 slides from Sonic Healthcare's investor presentation, May 22, 2002
Slide 1: Presentation to BNP Paribas
Presentation to BNP Paribas 22 May 2002 Colin Goldschmidt Managing Director Sonic Healthcare Sonic Healthcare Limited
Slide 2: Agenda
Agenda • Financials – 3rd Quarter 2002 – 2002 full-year projections – 2003 expectation • Market Update – Pathology – Radiology • Foundation Healthcare • UK Acquisition • Sonic Future Strategy Sonic Healthcare Limited
Slide 3: Third Quarter 2002 Results
Third Quarter 2002 Results (Unaudited) • Revenue $213 million • EBITA $36.6 million • EBITA Margin – 17.7% (excluding SciGen) : 3rd quarter 2002 – 16.3% (excluding SciGen) : 1st half 2002 Sonic Healthcare Limited
Slide 4: 4th Quarter 2002
4th Quarter 2002 • Sonic entities all tracking well • Melbourne Pathology – Organic market growth – Significant cost reductions – Service now excellent – EBITA margins touching 15% • Southern.IML merger – Seamless merger, no disruption to services – Significant margin expansion of both entities • Cl
Slide 5: 2003 Guideline
2003 Guideline • Revenue range: $950-$965 million • EBITA range: $166-$174 million • EBITA % range: 17.5–18.0% Sonic Healthcare Limited
Slide 6: Sonic Annual Revenues ($M)
Sonic Annual Revenues ($M) (Forecast 2002 and 2003 Revenues) 1000 900 800 700 600 $M 500 400 300 200 100 0 1999 2000 2001 2002F 2003(F) Revenue 173.6 387.4 627.9 840.0 950.0 Sonic Healthcare Limited *2003 forecast revenue assumes no new acquisitions
Slide 7: Sonic – EPS & EPS Growth
Sonic – EPS & EPS Growth 35.0 30.0 25.0 20.0 Cents per share 15.0 10.0 5.0 0.0 1995 1996 1997 1998 1999 2000 2001 2002 EPS (c per share) 5.8 8.0 9.5 11.8 16.7 21.7 27.5 EPS Growth (%) 38% 19% 24% 42% 30% 24% Sonic Healthcare Limited EPS=Earnings per Share (before amortisation of intangibles)
Slide 8: EBITA & EBITA Growth
EBITA & EBITA Growth 180.0 160.0 140.0 120.0 100.0 $M 80.0 60.0 40.0 20.0 0.0 1996 1997 1998 1999 2000 2001 2002(F) 2003(F) EBITA 12.2 18.1 25.3 35.9 70.8 110.2 140.0 170.0 EBITA Growth 48% 40% 42% 97% 56% 27% 21% 2003 Forecast EBITA assumes no new acquisitions Sonic Healthcare Limited 2002(F) EBITA
Slide 9: Sonic EBITA Margin Expansion
Sonic EBITA Margin Expansion 1999 20.7% Pure “Old Sonic” (NSW and SA pathology operations only). Pre-SGS acquisition. 2000 17.9% SGS Acquisition in December 1999. SGS EBITA margins 13.5% at time of acquisition. Dilution effect of low margin acquisitions. 2001 18.3% Early SAT synergies commencing to
Slide 10: Incremental Phases of Sonic
Incremental Phases of Sonic • Phase I (1992-1998) – Revenue $30 - $175million – Building pathology assets Margin expansion through – Critical mass Rationalisation (1+1=3) – Service excellence with customers – Branding in healthcare market • Phase II (1999-2001) – Revenue $175 - $600million – Doublin
Slide 11: Pathology Update
Pathology Update • “Funding Cap” Agreement runs to 2004 – Adjusted market growth close to cap budget – No fee reductions anticipated • No evidence to support public sector competition impact • Sonic holds strong market positions in all Australian states, in NZ and in the UK – Branding, image – Servi
Slide 12: Radiology Update
Radiology Update • Sonic radiology entities tracking well • Integration of Sonic Imaging – Sonic Amalgamation Teams (RadSATs) established – Group purchasing – Co-branding and co-marketing with Sonic pathology • Margin expansion Sonic Healthcare Limited
Slide 13: Foundation Healthcare (FNC) Alliance
Foundation Healthcare (FNC) Alliance • Strategic rationale of the FNC investment: to capture pathology referrals from FNC centres • Sonic achieving incremental revenue growth from FNC medical centres • Carrying value of Sonic’s 10% investment – Management confident that no write down required – Valu
Slide 14: UK Acquisition
UK Acquisition The Doctors’ Laboratory (TDL) • Largest private pathology company in UK • Based in London’s “Harley Street” district • TDL commenced operation in 1987 • Annual revenue ~£20 million (A$55 million) • High margin business • Strong historical revenue and EBIT growth rates, set to continue
Slide 15: TDL Acquisition Details
TDL Acquisition Details • Purchase price £65 million – £58 million - Cash – £7 million – Sonic shares • Represents 9.3X prospective EBITA multiple • No liabilities assumed • Transaction EPS positive Sonic Healthcare Limited
Slide 16: TDL Management
TDL Management • Executive Chairman – Dr Ray Prudo (Co-founder) • CEO – Mr David Byrne • Established management team with excellent track record • All Management and staff retained, with senior managers contracted by Sonic • TDL employs over 200 staff • Senior staff to be issued with Sonic options •
Slide 17: Sonic/TDL Cultures
Sonic/TDL Cultures • Sonic and TDL have common cultures – People focussed – “Medical management” strategy – High quality operation and service levels – Outstanding professional reputation Sonic Healthcare Limited
Slide 18: Sonic's Value to TDL
Sonic’s Value to TDL • Lab design, systems, workflow • Consolidation, centralisation • Rationalisation, financial efficiencies • Large laboratory operation • Benchmarking and KPI’s • IT and E-products • Purchasing • Mergers and acquisitions • Access to capital markets Sonic Healthcare Limited
Slide 19: UK Health
UK Health • Total health expenditure 6.7% of GDP • State of Health Report :Delivering The NHS Plan (April 2002) – “Catch-up” funding to 9.4% of GDP by 2008 – Increase of 7.5% above inflation expenditure on healthcare over next 5 years (2003-2008) – Reduce waiting lists and waiting times – Increase N
Slide 20: UK Pathology
UK Pathology • Public Private Partnerships (PPP) in pathology – Private laboratory operates hospital laboratory – Private laboratory provides off-site laboratory for public hospital – Private laboratory provides management services to hospital • Delivering the NHS Plan (April 2002) – “The NHS will e
Slide 21: UK Healthcare
UK Healthcare • Press Release – Health Secretary, Alan Milburn (30 April 2002): “New Freedoms for Local Health Services to Buy the Best Care for NHS Patients” – “Primary Care Trusts should feel free to commission care from wherever they can get the best service for patients” – “Primary Care Trusts h
Slide 22: Sonic Strategy
Sonic Strategy • To partner with established players in suitable offshore markets • UK market / TDL platform an ideal base for expansion into UK – Private Pathology Market – NHS Market • European pathology markets highly fragmented and present excellent opportunities for future growth and rationalis
Slide 23: Sonic Future Strategy
Sonic Future Strategy • Pathology – Ongoing consolidation and rationalisation – SAT strategy has 3 to 4 years to run – Organic, market share growth – Acquisitions • Radiology – Proceed with national roll out using PMI/QXR/SKG as platform – Organic growth and margin expansion – Capture synergies with
Slide 24: Thank You!
Thank You! Sonic Healthcare Limited