Cleopatra Hospital Company · EGX:CLHO
Cleopatra Hospital — Cleopatra Hospitals Group — Q1 2020 Earnings Presentation
57 slides from Cleopatra Hospital's earnings presentation, 2020
Slide 1: Cleopatra Hospitals Group Investor Presentation 1Q20
Cleopatra Hospitals Group Investor Presentation 1Q20
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements, including, but not limited to, statements concerning expectations, projections, objectives, targets, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans or intentions relating
Slide 3: Table of Contents
TABLE OF CONTENTS Unique Investment Story 1 Performance Review 2 Recent Business Updates 3 Expansion Strategy 4 Governance & Shareholder Information 5 Appendix 6
Slide 4: A Unique Investment Story
A Unique Investment Story • Leading integrated healthcare • Group wide tenders in provider in Egypt with track pharmaceuticals and medical record of acquiring and consumables that drive scale cost integrating hospital assets efficiencies and improve margins • Institutionalizing the healthcare • Scal
Slide 5: Diversified Service Offering and Revenue Stream
Diversified Service Offering and Revenue Stream 81%* 2%* 14%* 3%* HOSPITALS POLYCLINICS DIAGNOSTICS OUTPATIENT PHARMACY CHG operates two polyclinics located CHG operates six leading hospitals in strategic neighborhoods of East and CHG operates a Radiology services CHG currently operates two across t
Slide 6: Clearly Defined Core Growth Strategy
Clearly Defined Core Growth Strategy Integrating the platform to Leveraging payor and achieve higher efficiencies supplier relationships Geographic expansion in Egypt Enhancing utilization and linked to following Establish centers of optimizing existing capacity Expanding Capacities and the main pay
Slide 7: Broad Network Coverage in Greater Cairo
Broad Network Coverage in Greater Cairo Cleopatra Hospitals Group, is the largest private hospital group in Egypt by number of beds and operating hospitals with a broad network coverage across Greater Cairo Serving over 1 Million Patients per Year 6 Hospitals 1,000 +5300 • 782 Beds 2 Polyclinics 240
Slide 8: 2019 in Review
2019 in Review Rate of Return on Capital Revenues Gross Profit Adj EBITDA Strong Return on Capital Scale and Integration Model Operational Efficiencies Sustainable Profitability Metrics 28% 28% CAGR: 35% 35% 23% 23% 23% 19% 1,798 31% 29% 30% 501 33% 626 1,456 514 403 23% 22% 1,127 20% 864 339 259
Slide 9: 2019 in Review (Cont’d)
2019 in Review (Cont’d) 2019 JAN MAR SEPT DEC Signing of JV with Nahda East Cairo Exclusivity West Cairo University to Queens Hospital CHG Assumes El Bani Suef Hospital Polyclinic Agreement to Polyclinic Establish 189-bed Acquisition Katib Operations Civil Work Kick-off Inauguration Acquire IVF Inau
Slide 10: CHG 1Q2020 Financial Highlights
CHG 1Q2020 Financial Highlights In the first quarter of 2020, CHG reported strong top-line growth and solid profitability despite the COVID- 19 outbreak weighing on patient EGP 136.6 mn EGP 502.9 mn volumes in the final weeks of March. Adjusted EBITDA1 in 1Q20 with a Consolidated revenues in 1Q20 wi
Slide 11: Solid Financial Performance 1Q2020
Solid Financial Performance 1Q2020 Revenues increased 21% y-o-y in the first three months of the year to EGP 502.9 million. Gross profit margin (GPM) for the quarter stood at 34%, in line with averages reported by the Group in FY2019 and FY2018. It is worth noting that, the adjusted EBITDA1 year-on-
Slide 12: Key Revenue Drivers (i)
Key Revenue Drivers (i) Cases* served continued to report year-on-year growth (+5%) despite the COVID-19 outbreak weighing down on volumes in the second half of March, with the impact most felt in the number of surgeries versus the first three months of 2019. Group Revenue Contribution by No. Outpat
Slide 13: Key Revenue Drivers (ii)
Key Revenue Drivers (ii) Surgery Revenues grew on the back of efforts of new Sales function in addition to referrals from polyclinics model. One Stop shop approach contributed to further growth in all segments referred from OPD and inpatients Revenues | Surgeries Revenues | Outpatient Revenues | Lab
Slide 14: Key Revenue Drivers (iii)
Key Revenue Drivers (iii) Revenue per bed at Group’s more established hospitals have continued to post solid year-on-year growth supported by management’s utilization enhancement and case mix optimization strategy. Revenue Progression Cleopatra Hospital | EGP mn Nile Badrawi | EGP mn by Hospital 1
Slide 15: Recent Business Updates
Recent Business Updates Cleopatra Investor Presentation 1Q20 15
Slide 16: CHG Medical Council
CHG Medical Council During the third quarter of 2019, the Group officially launched its new Medical Council. The new body will be under the direct supervision and guidance of the Board’s quality committee and will be composed of renowned specialized consultants from across the Group’s hospitals. Med
Slide 17: COVID-19 Response Protocols (I/IV)
COVID-19 Response Protocols (I/IV) CHG response protocol was developed to ensure the health and safety of its patients and staff while guaranteeing the quality and effectiveness of its medical care despite the ongoing difficulties Health and Safety Business Continuity From the very beginning, the Gr
Slide 18: COVID-19 Response Protocols (II/IV)
COVID-19 Response Protocols (II/IV) Back office & Operations Medical Council Responsibilities Training Patient Pathway BCP Key Pillars “To Adopt and Agile Ensuring the safety of our staff and patients Decision-Making Mentality” Disinfection & PPE Space Optimization Potential COVID-19-Positive Patien
Slide 19: COVID-19 Response Protocols (III/IV)
COVID-19 Response Protocols (III/IV) As demand for private COVID- Medical Council 19 treatment centres increased so did the number STEP 1 STEP 2 STEP 3 STEP 4 of suspected cases Patients flowing into the ER’s Patients are triaged and If results are positive and Once the MOHP is informed approaching
Slide 20: COVID-19 Response Protocols (IV/IV)
COVID-19 Response Protocols (IV/IV) In light of the COVID-19 pandemic and in an effort to better serve its patients and aid the Ministry of Health and Population in its fight against the virus, Cleopatra Hospital Group has transformed both Queens Hospital (which was currently undergoing a full renov
Slide 21: Digital Transformation and HIS/ERP Rollout Update
Digital Transformation and HIS/ERP Rollout Update The Group sees digitalisation as a key driver of future growth. Over the last few years, CHG has embarked on a digital transformation strategy, which sees the Group looking to introduce the latest digital solutions available on the market to enhance
Slide 22: Expansion Strategy
Expansion Strategy Cleopatra Investor Presentation 1Q20 22
Slide 23: Expansion strategy
Expansion strategy 1 2 3 4 5 6 Creating Feeder Building Strategic Brownfield / Expanding Creating Strategic Networks & Additional Acquisitions Greenfield Reach Beyond Entities to Serve Expanding Services Capacities in of Operating Expansions Greater Cairo Group’s Scale of Offering Existing Facilitie
Slide 24: Focus on Patient Pathway Capture to Maximize Share of Wallet
Core Theme – Focus on Patient Pathway Capture to Maximize Share of Wallet from Existing Payors Increase number of registered patients through increasing the outpatient network, while a focus on patient pathway capture results in increased network revenue from the core payors. Ambulance 10 Polyclinic
Slide 25: Expanding Services Offering: Home Visits
Expanding Services Offering: Home Visits In an effort to make healthcare accessible to as many Egyptians as possible, CHG has recently launched its new home visits service. The new service also plays a key role in helping the Egyptian government and people during the challenging crisis sparked by th
Slide 26: Expanding Services Offering: Telehealth
Expanding Services Offering: Telehealth In early 2020, CHG partnered with Elbalto, Egypt’s first telemedicine mobile app, to offer patients consultation and follow- ups through video calls. CHG Telehealth – Video Call App The new telemedicine services are accessible from the CHG App (available at bo
Slide 27: Expanding Services Offering: Diagnostics & Pharmacy Business Units
Expanding Services Offering: Diagnostics & Pharmacy Business Units In line with CHG’s strategy to further diversify its revenue streams and service offering, the Group has been expanding its diagnostics and pharmacy capabilities, with both segments representing areas of future expansion for the Grou
Slide 28: Building Additional Capacities in Existing Facilities
Building Additional Capacities in Existing Facilities Hospital Renovations & Capacity Additions Façade facelifts: 10th & 11th floor completed at NBH Inpatient wards Started expansion (20 beds) and Al Shorouk, renovations electromechanical with Cleopatra’s ongoing across all upgrades across all plann
Slide 29: Strategic Acquisition of Operating Facilities: IVF Segment
Strategic Acquisition of Operating Facilities: IVF Segment CHG signed a Letter of Intent “LOI” to acquire The newly acquired IVF centre is a highly scalable Services Offered majority control of an IVF center located in the specialized facility that can generate substantial heart of Cairo. The Group
Slide 30: Expansion Projects in Brownfield Hospitals
Expansion Projects in Brownfield Hospitals in and around Greater Cairo Expanding Reach Beyond Greater Cairo Brownfield Pipeline The Group is looking to CHG entered into a JV The new facility, not only The Group is currently assessing and penetrate the Bani Suef with Taaleem (Al Nahda sees the Group
Slide 31: Strategic Initiatives and Entities Created by CHG
Strategic Initiatives and Entities Created by CHG to Enhance Efficiencies in Operation As part of the Group’s strategy to leverage synergies and expand its service offerings, CHG is now in the process of creating business operation entities: Cleopatra Entity for Importing Pharmaceutical Cleopatra Ac
Slide 32: Governance & Shareholder Information
Governance & Shareholder Information Cleopatra Investor Presentation 1Q20 32
Slide 33: Governance (I)
Governance (I) The Group’s Board of Directors provides the necessary oversight and combination of expertise to thoroughly oversee the Group’s corporate governance framework, a cornerstone of the Group’s long-term success and value creation. Executive Board Non-Executive Board Members Independent Boa
Slide 34: Governance (II)
Governance (II) OPERATIONS ABC No Referral Fees Medical Council • CHG has a zero-tolerance approach to bribery and • CHG does not pay any referral fees or kickbacks to • CHG recently launched a group-wide medical council corruption with a clear anti-bribery and anti-corruption physicians and instead
Slide 35: Key Investor Information
Key Investor Information Cleopatra Hospitals Company’s Care Healthcare Limited’s DFI Shareholders Shareholder Structure Care Healthcare DEG, the German Investment and A Development Financial Institution An international financial institution, 38% Limited (Malta) Development Corporation, is a partly
Slide 36: Appendix
Appendix Cleopatra Investor Presentation 1Q20 36
Slide 37: Additional Information and Financial Disclosures
Additional Information and Financial Disclosures Cleopatra Investor Presentation 1Q20 37
Slide 38: A Unique Investment Story (I/III)
A Unique Investment Story (I/III) Market Leader in a Growing Market with Strong Long-term Prospects • Highly fragmented market with a small number of institutionalized and strong Number of Beds per 1,000 Citizens Egypt’s Number of Beds Breakdown brand players 2.90 127,600 • Significant under supply
Slide 39: A Unique Investment Story (II/III)
A Unique Investment Story (II/III) Strong Management with Structured Organizational Chart to Oversee All Aspects of the Business • CHG has created a central management team Audit Committee Board of Directors that focuses on setting the overall strategy of the Group Internal Audit Chief Executive Off
Slide 40: A Unique Investment Story (III/III)
A Unique Investment Story (III/III) Scale and Cost Synergies • Group-wide tenders in pharmaceuticals and medical consumables that drive scale cost efficiencies and improve margins • Scale volume benefits from providing payors with a network of healthcare services solutions • The size of the Group’s
Slide 41: Financial Performance by Hospital
Financial Performance by Hospital Cleopatra Hospital (CHC) Cairo Specialised Hospital (CSH) CAGR: 21% CAGR: 16% 764 374 677 42% 41% 287 493 43% 41% 244 34% 38% 28% 30% 35% 35% 281 318 187 184 79 203 83 69 87 129 87 31 102 35 2017 2018 2019 1Q 2019 1Q 2020 2017 2018 2019 1Q 2019 1Q 2020 Revenue G
Slide 42: Balance Sheet and Leverage
Balance Sheet and Leverage Balance Sheet Summary Bank Debts Trend (EGP m) EGP 000 400 20.0% 378 18.2% 18.3% Balance Sheet Summary Dec-19 Mar-20 Cash 841 746 18.0% 350 326 16.5% Inventory 49 65 16.0% Debtors & other Debt balance 444 512 300 13.6% Current Assets 1,335 1,323 14.0% Intangible Assets 414
Slide 43: Cash Conversion Cycle
Cash Conversion Cycle DIO DSO 97.8 48.7 39.8 97.4 Dec-19 Mar-20 Dec-19 Mar-20 DPO Cash Conversion Cycle 33.4 115.7 113.2 21.5 Dec-19 Mar-20 Dec-19 Mar-20 Cleopatra Investor Presentation 1Q20 43
Slide 44: Cash Flow Walkthrough in 2019
Cash Flow Walkthrough in 2019 Ending consolidated cash balance amounts to EGP 841m as of Dec 2019, out of Cash Flow Outlook 2Q2020 which EGP 50m in Treasury Bills and EGP 177m time deposits Cash Flow Bridge Cash Flow Bridge 841 433 (25) (69) (135) 953 (136) 23 841 19 77 487 (358) (125) (95) (43) (32
Slide 45: Capex Profile
Capex Profile Capex Investments Organic Capex Expansion Capex Acquistions Acquisition Investments: • El Katib (143mn Propco & 135mn Opco) Acquisitions • Queens (25mn Opco) • IVF (2020) EGP 250mn 160 Medical & Renovation Capex: • Investments need to refurbish/enhance Expansion recently added faciliti
Slide 46: Consolidated Income Statement
Consolidated Income Statement All figures in EGP mn 1Q2020 1Q2019 % change Revenues 502.9 416.0 21% Cost of sales (331.7) (261.8) 27% Gross profit 171.2 154.2 11% Gross Profit Margin 34% 37% General & administrative expenses (70.0) (98.6) -29% Cost of acquisition activities 0.0 (0.5) n/a Provisions
Slide 47: Consolidated Balance Sheet
Consolidated Balance Sheet All figures in EGP mn 31 December 2019 31 March 2020 Non-current assets Fixed assets 908.5 931.8 Intangible assets 413.6 413.6 Right of Use 10.2 9.7 Payment under investment - 21.7 Total non-current assets 1,332.4 1,376.9 Current assets Paid under subsidiaries capital incr
Slide 48: Consolidated Cash Flow Statement
Consolidated Cash Flow Statement All figures in EGP mn 31 March 2019 31 March 2020 Cash flow from operating activities: Profit before tax 80.6 116.7 Adjustments for: Depreciation 14.0 20.7 Allowance for impairment of current assets 31.9 13.0 Provision 0.5 0.6 Capital gain/Loss (0.2) (0.2) Credit / D
Slide 49: Market Overview
Market Overview Cleopatra Investor Presentation 1Q20 49
Slide 50: Underserved and Under-penetrated Market with Steady Demand Growth
Underserved and Under-penetrated Market with Steady Demand Growth Supply Gap in Egyptian Healthcare Industry Healthcare Expenditure in Egypt Population (millions) Public vs. Private Healthcare Expenditure | EGP bn CAGR: 2.2 % 102 104 104 106 108 113 118 124 130 92.0 96.0 98.0 101.0 110.0 83.0 86.0 8
Slide 51: Egypt Total Hospital Beds (I/III)
Egypt Total Hospital Beds (I/III) No. of Hospital Beds in Egypt (K) Total = 133 Beds 35 98 100% Armed Forces Facilities Specialized Medical Centers Teaching Institutes Highly Fragmented Space 80% Includes Hospitals Owned & Operated by Public Insurance 60% Others General Hospitals 40% C. 50 – 100+ Be
Slide 52: Egypt Total Hospital Beds (II/III)
Egypt Total Hospital Beds (II/III) Basic Healthcare General Hospitals Specialized Medical Teaching Institutes Armed Forces Private Hospitals Centers (Public Insurance) Centers / Medical Colleges Facilities (Non-Government) • Support basic • First level of public • One of the highest • Provide diagno
Slide 53: Egypt Total Hospital Beds (III/III)
Egypt Total Hospital Beds (III/III) Large Hospitals Medium Hospitals Small Hospitals (100+ Beds) (50 – 100 Beds) (<50 Beds) • Large multi super-specialty care centers • Basic centers with beds (average size of with ability to do high-complexity cases 15 – 20 beds) with focus on triage & • Multi-spec
Slide 54: Greater Cairo Hospital Groups by Commercial Bed Count
Greater Cairo Hospital Groups by Commercial Bed Count Hospital Groups in Cairo (Operational) – Bed Count Market Share in Cairo by # of Commercial Beds 7821 6712 481 9% 3003 2604 4% 8% 4% 1% 74% Hospital Groups in Cairo - # of Operational Hospitals 6 3 3 3 CHG Elaj Alameda German Saudi Andaluseya Oth
Slide 55: Greater Cairo Distribution of Hospitals by Commercial Beds
Greater Cairo Distribution of Hospitals by Commercial Beds Distribution of Hospitals in Greater Cairo by # of Commercial Beds Cleopatra Investor Presentation 1Q20 55
Slide 56: Egypt Healthcare Market Payor Profile
Egypt Healthcare Market Payor Profile Egypt Healthcare Market Payor Profile 16.5 72 28.2 5 4.8 0.5 1.4 Out of Pocket MOH HIO Public Agencies Private / Syndicate Insurance Corporates/NGOs Cleopatra Investor Presentation 1Q20 Source: MOHP 2010, World Bank Report “A roadmap to achieve social justice in
Slide 57: Thank you
Thank you INVESTOR RELATIONS C ONTAC TS SHAREHOLDER INFORMATION Telephone: +2 02 23103771 EGX: CLHO.CA E-mail: ir@cleopatrahospitals..com Listed: June 2016 investors.cleopatrahospitals.com Shares Outstanding: 1.6 billion C leopatra Inves tor P res entation 1Q20 57
Cleopatra Hospitals Group — Q1 2020 Earnings Presentation on 6ix