Spire Healthcare Group Plc · LSE:SPI
Spire Healthcare — FY2018 Earnings Presentation
31 slides from Spire Healthcare's earnings presentation, Feb 28, 2019
Slide 1: 2018 Full Year Results Presentation
2018 Full Year Results Presentation 28 February 2019
Slide 2: Disclaimer
Disclaimer These materials contain certain forward-looking statements relating to the business of Spire Healthcare Group plc (the “Company”), including with respect to the progress, timing and completion of the Company’s development, the Company’s ability to treat, attract, and retain patients and c
Slide 3: Agenda
Agenda 2018 Overview Justin Ash, Chief Executive Officer 2018 Financial Review Jitesh Sodha, Chief Financial Officer Operations and Strategy Review Justin Ash, Chief Executive Officer Q&A 3
Slide 4: 2018 Overview
2018 Overview Justin Ash, Chief Executive Officer 4
Slide 5: Strategy affirmed by the challenging environment
2018 Overview Strategy affirmed by the challenging environment Waiting lists rise but declines in NHS Spire to drive private focus admissions Clinical quality is key Invest in self-pay capability Department of Health raises PMI share gain pressure on quality Maintain NHS share Multiple C
Slide 6: EBITDA of £119.4m with good strategic and operational progress
2018 Overview EBITDA of £119.4m with good strategic and operational progress Encouraging growth Savings programme in Self-Pay and PMI (esp. CQC scores rising rapidly initiated Q4) offset NHS decline Capex of £65.2m, major Dividend maintained Strong staff and investments made at 3.8p per share consul
Slide 7: Platform Built in 2018
Platform Built in 2018 First Choice for Uncompromising Future EBITDA Private Patients, on Clinical Quality Growth, Good Cash NHS Key Partner and Patient Safety Conversion Central sales and marketing Enhanced staffing levels Central recruitment and (Theatre and Pre-Operative agency cost control
Slide 8: Experienced Executive Team Now in Place
Experienced Executive Team Now in Place Justin Ash Jitesh Sodha(i) Chief Executive Officer Chief Financial Officer John Forrest(i) Alison Dickinson Chief Operating Officer Group Clinical Director JJ de Gorter Peter Corfield Chief Medical Officer Chief Commercial Officer Shelley Thomas(ii) Dan Toner
Slide 9: 2018 Financial Review
2018 Financial Review Jitesh Sodha, Chief Financial Officer 9
Slide 10: Financial Headlines 2018
Financial Headlines 2018 EBITDA(i) Profit Before Adjusted EPS Revenue flat declined to Tax £8.2m 6.9p at £119.4m (after (2017: 14.4p) £931.1m (12.8% exceptional (2017: £931.7m) margin) items Basic EPS 2.8p (2017: 4.2p) (2017: 16.1%) of £25.6m) Debt facility Net Debt / Net Debt extended to Final divi
Slide 11: Revenue Maintained On The Back of Increasing Private Mix Despite Decline in Overall Admissions
Revenue Maintained On The Back of Increasing Private Mix Despite Decline in Overall Admissions Group Admissions – 260,083 ARPC – £2,451 Group Revenue – £931.1m (2017: 269,301 / 3.4% Decrease) (2017: £2,366 / 3.6% Increase) (2017: £931.7m / 0.1% Decrease) FY18 FY17 Change FY18 FY17 Change FY18 FY17 C
Slide 12: NHS Admissions and Revenue
NHS Admissions and Revenue Admissions Revenue(i) 2018 2017 Change 2018 2017 Change (%) (000’s) (000’s) (%) (£m) (£m) E-Referral 84.7 89.8 (5.7%) 243.3 252.1 (3.5%) Local 8.0 11.8 (32.1%) 28.9 41.2 (29.9%) Total 92.7 101.5 (8.7%) 272.2 293.3 (7.2%) (i) Revenue includes both IP/DC and OPD 12
Slide 13: Quality Investment Was Planned, Scale of NHS Decline Unexpected
Quality Investment Was Planned, Scale of NHS Decline Unexpected £150m £119m FY 2017 2017 Mix Volume Patient New Marketing Inflation Rent Savings Other FY 2018 FY EBITDA EBITDA Safety and Hospitals EBITDA EBITDA Governance Full Year Admissions Investment Inflation Impact 13
Slide 14: First Time Positive EBITDA Contribution From New Hospitals
First Time Positive EBITDA Contribution From New Hospitals St Anthony’s, Manchester & Nottingham Revenue (£m) EBITDA (£m) 21.3% 2.7 61.4 50.6 (2.2) FY 2017 FY 2018 14
Slide 15: Exceptional Costs
Exceptional Costs Exceptional Costs & Other Costs FY 2018 £m Business reorganisation and restructuring 4.7 Impairments and write-offs 17.9 GDPR compliance set-up 1.5 Other 1.5 Total 25.6 Exceptional and Other Costs of £49.2m in 2017 Impairments and write-offs largely relate to H1 2018 impairment
Slide 16: Cash Surplus After Capex & Dividends
Cash Surplus After Capex & Dividends FY 2018 FY 2017 £m £m EBITDA 119.4 150.0 Operating cash flow before exceptionals and tax 125.4 158.4 Capex (65.2) (119.9) Exceptional items (7.7) (31.3) Financing activities (excl. dividends) (24.6) (19.2) Dividends Paid (3.8p per share) (15.2) (15.2) Other (4.2)
Slide 17: Adoption of IFRS 16 from 1 January 2019
Adoption of IFRS 16 from 1 January 2019 Sizeable portfolio of property-related operating leases under IAS 17 Operating leases recognised as a right-of-use asset relating the leased asset and a liability for the obligation to make lease payments Significant impact of IFRS 16 accounting changes
Slide 18: FY 2019 Outlook
FY 2019 Outlook Return to modest revenue growth, offset by mix and managed cost increases Self-Pay Positive momentum in admissions and revenue PMI Moderate revenue increase NHS Tariff improvement from April 2019, but volume remains unpredictable Mix Continued shift to oncology and day case Costs Ful
Slide 19: Operations and Strategy Review
Operations and Strategy Review Justin Ash, Chief Executive Officer 19
Slide 20: The Future
The Future “To become the go-to UK independent healthcare brand” First Choice Uncompromising on for Private Patients, Clinical Quality and NHS Key Partner Patient Safety Future EBITDA Growth, Good Cash Conversion 20
Slide 21: First Choice for Private Patients, NHS Key Partner
First Choice for Private Patients, NHS Key Partner Background Spire plans 2019 and beyond • Healthcare Consumerisation What We Are Changing What We Will Deliver Growing • Slight Growth in PMI Secure PMI wins Self-Pay Private Market momentum Develop services • Self-Pay Market Growth and acuity
Slide 22: Uncompromising on Clinical Quality and Patient Safety
Uncompromising on Clinical Quality and Patient Safety Background Spire plans 2019 and beyond What We Are Changing What We Will Deliver Tightening Heightened Patient Regulatory Oversight Awareness Sustain safety / All CQC Good / governance gains Outstanding Attract and retain Sector leading Q
Slide 23: Future EBITDA Growth, Good Cash Conversion
Future EBITDA Growth, Good Cash Conversion Background Spire plans 2019 and beyond What We Are Changing What We Will Deliver 2018 Medical Inflation, Recruitment control Return to Investment Especially in Staff and agency growth post- reduction 2019 Further procurement Savings Strong savings S
Slide 24: Key Takeaways
Key Takeaways • Challenging year 2018 • Strong strategic and operational progress • Investment in business, along with positive cash generation • Return to modest revenue growth • Full year effect of investment, inflations, further efficiencies 2019 • Focus on cash and debt reduction • Set up for fu
Slide 25: Questions
Questions Spire Healthcare Lovking after gM
Slide 26: Today's Q&A Panel
Today’s Q&A Panel Justin Ash Jitesh Sodha John Forrest Chief Executive Officer Chief Financial Officer Chief Operating Officer 26
Slide 27: Appendix
Spire Healthcare
Slide 28: Spire is the Market Leader
Spire is the Market Leader Spire’s well invested platform is perfectly placed for market evolution 39 8 19 134 Hospitals Clinics Cancer Operating (20 freehold(i)) units theatres 777,000 260,000 9,300 7,500 Patients IP/DC Consultants colleagues overall Patients with PPs £1.1bn 9.1% 19% 23% of all UK
Slide 29: Trading Margin Analysis
Trading Margin Analysis Costs as % revenues FY 2018 FY 2017 Change % % % Clinical staff costs 20.5 19.6 0.9 Direct costs 22.4 22.1 0.3 Medical fees 10.5 11.1 (0.6) Cost of sales 53.4 52.8 0.6 29
Slide 30: Impact of IFRS 16 – Leases
Impact of IFRS 16 – Leases £ million As Reported 2018 IFRS 16 Impact As Restated 2018 Other operating costs – Operating leases 66.1 (66.3) (0.2) Other operating costs – Depreciation 65.1 23.8 88.9 Operating profit / (loss) 28.6 42.5 71.1 Finance income 0.2 - 0.2 Finance cost (20.6) (56.3) (76.9) Pro
Slide 31: 2022 Extended Debt Facility – Revised Covenant Calculation
2022 Extended Debt Facility – Revised Covenant Calculation The Group’s senior finance facility of £425m + £100m Revolver extended to July 2022 Currently 3 hospitals out of 19 treated differently - from 1 January 2019 onwards all leases will be treated consistently across the portfolio Revised
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