Primary Health Care — FY2008 Earnings Presentation
24 slides from Primary Health Care's earnings presentation, Aug 26, 2008
Slide 1: Results for Year Ended 30 June 2008
Results for Year Ended 30 June 2008 Investor Presentation 26 August 2008
Slide 2: Highlights
Highlights ■ $3.5bn Symbion Health acquisition completed in March 2008 ■ On track to realise targeted synergies of $95-105m by FY10 ■ Successful Institutional and Retail Entitlement Offers raise $1.4bn ■ Solid underlying operating performance – EBITDA of $175m (excluding Consumer & Pharmacy and one-
Slide 3: Summary Results
Summary Results ■ Consolidation of Symbion Health Year Ended 30 June FY08 FY07 from 1 March 2008 $m $m ■ Realisation of synergies commenced Sales Revenue¹ 649.6 272.3 ■ Symbion revenues retained EBITDA¹ 174.8 106.2 Finance Costs¹ (58.5) (12.1) ■ One-off items largely relate to Symbion transaction an
Slide 4: Symbion Integration Progressing to Plan
Symbion Integration Progressing to Plan ■ Sale of Symbion Consumer agreed – Cash consideration of $560m, to be applied to debt reduction – Expected completion on 31 August 2008 – No material taxable gain ■ Sale of Symbion Pharmacy agreed – Gross consideration of $505m – Net cash consideration of $20
Slide 5: Income Statement
Income Statement Year Ended 30 June FY08 FY07 ■ Results impacted by first-time $m $m consolidation of Symbion (4 months) Sales Revenue 649.6 272.3 ■ Consumer & Pharmacy operating Operating EBITDA 174.8 106.2 earnings contained in one-off items Depreciation & Amortisation (40.0) (21.1) Operating EBIT
Slide 6: Segmental Performance
Segmental Performance Year Ended 30 June FY08 FY07 Like- $m for- ■ Revised segment Primary Symbion¹ Total Like disclosure $m (4 mths) $m % Mvt $m ■ Primary Imaging Medical Centres 168.6 20.5 189.1 140.1 operations now Pathology 90.9 219.4 310.3 88.9 separated from Medical Imaging 26.3 102.5 128.8 22
Slide 7: Medical Centres
Medical Centres Year Ended 30 June FY08 Primary Symbion Total FY07 $m (4 Mths) $m $m $m Sales Revenue 168.6 20.5 189.1 140.1 EBITDA 100.7 4.6 105.3 86.9 EBITDA Margin 59.7% 22.5% 55.7% 62.0% ■ 41 Primary large scale centres at year end, 87 in total including Symbion centres ■ Total of 111 GP practic
Slide 8: Pathology
Pathology Year Ended 30 June FY08 Primary Symbion Total FY07 $m (4 Mths) $m $m $m Sales Revenue 90.9 219.4 310.3 88.9 EBITDA 14.2 39.0 53.2 14.3 EBITDA Margin 15.6% 17.8% 17.2% 16.0% ■ All Primary operations in Queensland, Victoria and ACT successfully merged with Symbion counterparts ■ Redirection
Slide 9: Imaging
Imaging Year Ended 30 June FY08 Primary Symbion Total FY07 $m (4 Mths) $m $m $m Sales Revenue 26.3 102.5 128.8 22.0 EBITDA 7.7 11.6 19.3 6.9 EBITDA Margin 29.4% 11.3% 15.0% 31.4% ■ Result since March 2008 impacted by: – Flow-through effect of 16% Symbion-initiated salary increases – Lack of increase
Slide 10: Health Technology
Health Technology Year Ended 30 June FY08 FY07 $m $m Sales Revenue 38.6 31.4 EBITDA 11.4 10.2 EBITDA Margin 29.4% 32.6% ■ Strong revenue growth in Medical Director and other software products ■ Steady growth in Knowledge Solutions and Sponsorship ■ Firm underlying margin after allowance for increase
Slide 11: Corporate Costs
Corporate Costs Year Ended 30 June FY08 Primary Symbion Total FY07 $m (4 Mths) $m $m $m Unallocated Costs (EBITDA) (11.9) (2.6) (14.5) (12.1) ■ Separately identified following completion of Symbion acquisition – previously aggregated with Medical Centres ■ Significant Symbion head office headcount r
Slide 12: One-Off and Restructuring Items
One-Off and Restructuring Items Year Ended 30 June 2008 Gross Tax Net $m $m $m Symbion Dividend Received 6.5 - 6.5 Finance Costs on 20% Symbion Stake Prior to Consolidation (26.2) 7.9 (18.3) Impairment of Investment in Ascent Pharmahealth (Genepharm) (3.9) 1.2 (2.7) Restructuring Costs (34.2) 10.2 (
Slide 13: Finance Costs Allocation
Finance Costs Allocation Year Ended 30 June 2008 Continuing Discontinued Total Operations Operations $m $m $m Finance Costs – Ongoing Operations 58.5 - 58.5 Finance Costs on 20% Symbion Equity Stake (up to Feb 2008) 26.2 - 26.2 One-Off Finance Costs 17.6 38.6 56.2 - Interest Attributable to C&P Busi
Slide 14: Balance Sheet
Balance Sheet Year Ended 30 June FY08 FY07 ■ Net business assets held for $m $m resale (Consumer & Pharmacy) in line with anticipated net proceeds Businesses Held For Resale 1,286 - Other Current Assets 181 37 ■ Sale proceeds will be applied to Goodwill & Intangibles 2,916 412 debt reduction Other N
Slide 15: Debt Position
Debt Position Facilities Available Drawdown Anticipated Adjusted Post- $m 30 June 2008 C&P Sale Sale Loan $m Impact Position $m $m Tranche A Syndicated 1,438 1,438 - 1,438 Tranche B Syndicated 780 780 (780) - Secured Working Capital 100 - - - Total Balance Sheet Facilities 2,318 2,218 (780) 1,438 Of
Slide 16: Dividends
Dividends ■ Final dividend of 5 cents per share fully franked – brings full year payout to 27 cents per share ■ Lower second half payment in light of one-off transaction-related and restructuring costs ■ Existing policy of paying out a significant proportion of earnings to be retained ■ 2.5% discoun
Slide 17: Health Services Market Overview
Health Services Market Overview ■ Rising cost pressures, difficult economic conditions for all will encourage industry consolidation ■ Emergence of larger medical centres accelerating, driven by increased patient acceptance and need for optimal integration of limited healthcare resources ■ Ageing po
Slide 18: Medical Centres - Operational Outlook
Medical Centres - Operational Outlook ■ Committed to continuation of Primary medical centre roll-out strategy Large Medical Centre Numbers (Year End Position) ■ Improve utilisation and profitability of existing 45 medical centres via: 40 – Back-filling GPs in existing centres 35 – Expanding the serv
Slide 19: Pathology - Operational Outlook
Pathology - Operational Outlook ■ Leverage off medical centre growth to expand pathology market share and increase profitability ■ Merger of SDS and Laverty laboratories transition to be completed 2Q09 ■ Realisation of synergies skewed towards 2H09 due to timing of laboratory merger and consumables
Slide 20: Imaging - Operational Outlook
Imaging - Operational Outlook ■ Improving productivity with more work to the higher cost base centres ■ Some Symbion radiologists to move to Primary private practice model of care ■ Resultant diminishing of wage cost pressures ■ Implementation of technology update across combined business ■ Visible
Slide 21: Health Technology - Operational Outlook
Health Technology - Operational Outlook ■ Increase market penetration of health technology solutions ■ Establishment of new transactional revenues – SMS and EFTPOS ■ Entry into the New Zealand market for Knowledge Solutions ■ Exploration of international markets for Medical Director ■ Upside in prov
Slide 22: FY09 EBITDA Guidance
FY09 EBITDA Guidance ■ Forecast FY09 EBITDA guidance of c.$350m, based on: – Realisation of 50% of targeted synergies (c.$50m) – Merger of NSW Pathology laboratories occurs 2Q09 – Exclusion of any further one-off costs re site closures – Exclusion of Consumer & Pharmacy EBITDA – No further significa
Slide 23: Summary
Summary ■ FY08 a transformational year for Primary Health Care ■ Symbion acquisition carries strong strategic logic ■ Addition of Symbion strengthens Primary’s position as a leading integrated provider of healthcare services in Australia ■ On track to realise identified synergies of $95-105m – 50% b
Slide 24: Appendix - National Footprint
Appendix 1 - National Footprint PRIMARY’S EXPANDED NATIONAL NETWORK QUEENSLAND NORTHERN TERRITORY 16 medical centres 2 pathology labs 25 pathology labs 7 collection centres 209 collection centres 38 diagnostic imaging sites NEW SOUTH WALES / ACT 35 medical centres 29 pathology labs 296 collection ce