Integrated Diagnostics Holdings Plc · LSE:IDHC
Integrated Diagnostics — H1 2022 Earnings Presentation
57 slides from Integrated Diagnostics's earnings presentation, September 2022
Slide 1: IDH Results Presentation
IDH Results Presentation September 2022
Slide 2: Contents
Contents: • IDH At a Glance • 1H 2022 Results Overview • Key Investment Highlights • Our Market • Our Business Model • Financial Position and Performance • Growth Strategies • Governance 2 INTEGRATED DIAGNOSTICS HOLDINGS
Slide 3: Who We Are
Who We Are Integrated Diagnostics Holding is a leading, fully-integrated provider of high-quality medical diagnostic services with a footprint spanning Egypt, Jordan, Sudan and Nigeria Our Services Our Brands Accreditations Immunology Radiology Hematology Clinical Molecular Endocrinology Chemistry B
Slide 4: Our Geography
Our Geography IDH currently operates the largest branch network amongst private providers in Egypt and boasts an established presence in three key markets in the Middle East and Africa Egypt Nigeria 1979 488 #1 2018 12 1.8% Market Ranking1 Share of First began Branches (49% in Acquisition of (#1 in
Slide 5: Our Patients
Our Patients IDH serves two principal types of patients: contract and walk-in Around 70% of total revenue generated across the two segments is paid in cash Contract Patients Walk-In Patients IDH’s contract clients include institutions who enter into one-year IDH’s walk-in clients, also referred to a
Slide 6: IDH Post Covid-19: A new chapter (I/II)
IDH Post Covid-19 : A new chapter (I/II) IDH has transformed its business, rethinking its service offering and delivery capabilities, and setting the foundations for a new chapter of sustainable growth Test Offering and Reach Agility Delivery and Visibility Conventional Business Ramped up Ramped Up
Slide 7: IDH Post Covid-19: A new chapter (II/II)
IDH Post Covid-19: A new chapter (II/II) IDH has transformed its business, rethinking its service offering and delivery capabilities, and setting the foundations for a new chapter of sustainable growth Improved Long-term Efficiency Relationships Decreased Turnaround Times and Improved Patient Satisf
Slide 8: 1H 2022 Results Overview
1H 2022 Results Overview 8 INTEGRATED DIAGNOSTICS HOLDINGS
Slide 9: Important Notice
Important Notice Treatment of Revenue Sharing Agreements and Use of Alternative Performance Measures As part of IDH’s efforts to support local authorities in Egypt and Jordan in the fight against the pandemic, Biolab (IDH’s Jordanian subsidiary) secured several revenue-sharing agreements to operate
Slide 10: Results Snapshot
Results Snapshot IDH delivered robust growth in conventional offering in 1H 2022 demonstrating underlying strength EGP 1,891 mn Net Sales in 1H 2022 EGP 832 mn EGP 709 mn EGP 439 mn ▼ 18% y-o-y Gross Profit in 1H 2022 EBITDA1 in 1H 2022 Net Profit in 1H 2022 (Revenue of EGP 1,954 mn in 1Q22, ▼ 36% y
Slide 11: Sustainable Growth Despite Seasonality
Sustainable Growth Despite Seasonality IDH’s conventional business stood 32% above pre-pandemic levels in 1H2022, despite the second quarter being impacted by seasonal the slowdown associated with Ramadan and Eid holidays Conventional net sales continue growing solidly supported by higher Convention
Slide 12: Sustainable Growth Despite Seasonality – Quarterly
Sustainable Growth Despite Seasonality – Quarterly IDH’s conventional business stood 36% above pre-pandemic levels in Q2 2022, demonstrating the segment’s consistent growth despite seasonality associated with Ramadan and Eid holidays Conventional net sales continue growing solidly supported by highe
Slide 13: Contribution Margin to Net Sales Q2 2022 vs Q2 2021
Contribution Margin to Net Sales Q2 2022 vs Q2 2021 Analysis by Country IDH Net Sales | M-EGP Egypt Net Sales | M-EGP Jordan Net Sales | M-EGP Nigeria Net Sales |M-EGP Sudan Net Sales |M-EGP -21% +45% +91% -34% -36% 1,164 217 -51% +26% -15% 1,117 -31% 1,015 19 6 879 -27% 5 431 421 366 15 (37%) 774 (
Slide 14: Profitability in line with Historical Averages
Profitability in line with Historical Averages Despite the seasonal slowdown associated with 2Q 2022 on account of Ramadan and Eid, IDH’s margins at all levels of profitability are beginning to normalize to pre-pandemic averages Gross profitability in line with pre-pandemic averages EBITDA level pro
Slide 15: Net Sales/EBITDA Bridge
Net Sales/EBITDA Bridge Drop in EBITDA margin trickled-down from GPM, topped by increase in repair & maintenance and additional marketing spending related to BG Scan & D-Squares Loyalty programs IDH 1H FY21 Detailed net sales – EBITDA Bridge| M-EGP, % of net sales Egypt Profit share: 86.5 MEGP, Rest
Slide 16: EBITDA/Net Profit Bridge
EBITDA/Net Profit Bridge Doubling of interest income thanks to our strong cash balance and the allocation to t-bills has positively affected the effective tax rate reaching 32% vs 35% during the same period last year H1 2022 EBITDA/Net Profit Bridge | EGP million 69 709 6 75 (64) (147) 439 (211) 1H2
Slide 17: Solid Financial Position
Solid Financial Position The Group maintains a robust financial position, with a liquid balance sheet thanks to a strong cash generation profile allowing for consistent dividend payouts Consolidated Cash Balance | EGP mn Net Cash Balance* | EGP mn Gross Fixed Assets | M-EGP -7% -17% +14% 2,350 2,182
Slide 18: Segment Performance
Segment Performance IDH’s contract segments recorded strong conventional net sales growth in the first half of the year. Meanwhile, at the walk-in segment net sales came in largely unchanged from last year. Walk-in Segment Contract Segment Total 1H21 1H22 Change 1H21 1H22 Change 1H21 1H22 Change Net
Slide 19: Segment Performance
Segment Performance The contract segment continued to contribute the lion share of both patient volumes and consolidated revenues in 1H 2022 Revenue Split Patient Split 1H 2021 1H 2022 1H 2021 1H 2022 33% 33% 45% 42% 55% 58% 67% 67% Walk-in Corporate Walk-in Corporate Walk-in Corporate Walk-in Corpo
Slide 20: Regional Performance
Regional Performance IDH witnessed strong results from its operations in Egypt, Jordan and Nigeria, with its Sudanese operations impacted from the sharp devaluation of the Sudanese pound in February Revenue | EGP mn EGYPT 12% 7% ▼ 21% Patient Retention Direct-to-patient 1,935 80.6% 1,524 Growth in G
Slide 21: COVID-19-adapted Service Offering in Egypt and Jordan
COVID-19-adapted Service Offering in Egypt and Jordan Net sales in Egypt and Jordan were supported by both IDH’s Covid-19-related* test offering and its house call service despite both recorded year-on-year declines as infections and average test prices fell, and mandatory testing was lifted Covid-1
Slide 22: Continued Growth at Echo-Lab (Nigeria)
Continued Growth at Echo-Lab (Nigeria) IDH’s Nigerian operations reported year-on-year revenue growth of 25% in H1 2022 Top-line growth was supported by a 33% year-on-year increase in average net sales per test which came on the back of a rise in demand for the generally higher-priced MRI and CT tes
Slide 23: Continued Ramp up at Al Borg Scan
Continued Ramp up at Al Borg Scan Al Borg Scan offers a full range of radiology services, including EGP 35.4 MN 48.9k 63.4k EGP 562 EGP 724 but not limited to Magnetic Resonance Imaging (MRI), Computed Tomography (CT), Ultrasound, X-ray and H1 2022 Revenue H1 2022 Patients H1 2022 Tests H1 2022 H1 2
Slide 24: Outlook and Strategy
Outlook and Strategy IDH is well positioned to deliver solid growth in its conventional business supported by its flexible business model, robust mitigation measures, and effective growth and investment strategy FY 2022 Guidance Growth Drivers Al-Borg Scan Nigeria Conventional business set Capitaliz
Slide 25: Investment Highlights
Investment Highlights 25 INTEGRATED DIAGNOSTICS HOLDINGS
Slide 26: Investment Highlights
Investment Highlights IDH is an attractive investment opportunity with compelling fundamentals, present in fast- growing, under-served markets Operating in highly fragmented markets characterised by 1 strong structural growth drivers and high barriers to entry Deploys an asset-light business model t
Slide 27: Fast-Growing, Underserved Markets
Fast-Growing, Underserved Markets 27 INTEGRATED DIAGNOSTICS HOLDINGS
Slide 28: Favorable Industry Dynamics
Favorable Industry Dynamics IDH’s home market of Egypt is underpinned by robust structural growth drivers Lab tests per capita (2012) 23.2 High Disease Burden Operating in a still under-penetrated The Egyptian population is marked by a high incidence of market 10.1 lifestyle-related medical conditio
Slide 29: Favorable Industry Dynamics
Favorable Industry Dynamics IDH’s markets are characterised by high barriers to entry Economies of Scale Accreditation of Facilities Brand & Reputation Market Reach Key Stakeholder Relationships IT-enabled platform, Attracting patients Patients are loyal to Fragmented markets Building a scalable cri
Slide 30: IDH is a Consumer-Facing Service Provider
IDH is a Consumer-Facing Service Provider The mechanics of healthcare markets in developing economies are markedly different from those in many Western healthcare industries Private Healthcare Systems in Developing Economies IDH serves the private healthcare A hospital outpatient clinic or Perceived
Slide 31: Scalable Business Model
Scalable Business Model 31 INTEGRATED DIAGNOSTICS HOLDINGS
Slide 32: Asset-light Business Model
Asset-light Business Model IDH’s “Hub, Spoke and Spike” business model enables the Company to organically expand its reach in highly-fragmented markets with underserved diagnostic services demand Mega Lab: “Hub” • The Mega Lab, the largest automated lab in Egypt, serves as IDH’s diagnostic “Hub,” eq
Slide 33: Our Mega Lab
Our Mega Lab IDH’s Mega Lab provides a robust platform to support rapid, cost-effective growth Capabilities Quality Control • Mega Lab machines are capable of conducting a wide range of tests including basic blood grouping to advanced gene sequencing. • New and esoteric test facilities at the Mega L
Slide 34: Key Supplier Relationships
Key Supplier Relationships IDH leverages its bargaining power with suppliers to maximize value in a business that is fundamentally about economies of scale. Combined with the long-tenure nature of its supplier contracts, this provides significant protection against short-term price fluctuations. Dyn
Slide 35: Strong Growth and Financial Position
Strong Growth and Financial Position 35 INTEGRATED DIAGNOSTICS HOLDINGS
Slide 36: Key Financial Performance Indicators
Key Financial Performance Indicators Since the Company’s IPO on the LSE in 2015, IDH has delivered consistent top- and bottom-line growth supported by a steady increase in volumes and increasingly favourable pricing across the Group’s service offering Net Sales* | EGP mn - CAGR Gross Profit – GPM**
Slide 37: Regional Performance
Regional Performance Across its footprint, the Company deploys tailored expansion strategies which enable it to continue driving growth irrespective of the prevailing macroeconomic environment Share of 2021 Net Sales Revenues* (EGP mn) ▲89% IDH is in a strong competitive position in the 4,108 Egypti
Slide 38: Growth Strategies
Growth Strategies 38 INTEGRATED DIAGNOSTICS HOLDINGS
Slide 39: Future Growth Strategies
Future Growth Strategies IDH’s growth strategies rely on leveraging its competitive advantages to achieve four strategic goals Expand Customer Expand Reach Geographically In addition to organic expansion, the Company Beyond opening laboratories in new continues to seek value-accretive acquisitions g
Slide 40: Expanding Customer Reach – Growing In Egypt
Expanding Customer Reach – Growing In Egypt The Group enjoys ample growth room in Egypt thanks to its market leading position and extensive reach, attractive underlying fundamentals, and favourable regulatory environment Reach and penetration Solid Fundamentals Universal Healthcare Act Forecasted GD
Slide 41: Diversifying Service Offering – Al Borg Scan Expansion Updates
Diversifying Service Offering – Al Borg Scan Expansion Updates Al Borg Scan’s operates five branches, two of which were inaugurated in 2021 and a third in March 2022. The Group also earned the prestigious ACR (American College of Radiology) accreditation for Al Borg Scan’s Nuclear Medicine unit in A
Slide 42: House Call Services (Egypt and Jordan)
House Call Services (Egypt and Jordan) IDH’s house call services, offered in both Egypt and Jordan, is becoming a primary contributor to top-line, averaging 15-20% compared to a pre-pandemic contribution of c.10-11% Expands IDH’s customer base Expands reaching new segments of the House call services
Slide 43: Expanding Customer Reach – State-sponsored Initiatives
Expanding Customer Reach – State-sponsored Initiatives IDH’s nationwide presence and strong brand equity position it well to benefit from state- sponsored campaigns to increase awareness of preventative healthcare with diagnostic testing Duration Revenue Generated “100 Million Healthy Lives” campaig
Slide 44: Expanding Customer Reach – IDH Awareness Campaigns
Expanding Customer Reach – IDH Awareness Campaigns Parallel to state-sponsored initiatives, IDH also runs its own awareness campaigns focusing on specific diseases on a monthly basis and offering discounts on related testing IDH’s PCR Offers and Campaigns Discounts on PCR testing for Covid-19 PCR te
Slide 45: Diversifying Service Offering – New Investment in Wayak
Diversifying Service Offering – New Investment in Wayak IDH launches new subsidiary “Wayak” to offer data-driven healthcare services, utilising data analytics and artificial intelligence to capitalise on IDH’s database of over c.13 million patients Wayak Services Medication to be Service provider On
Slide 46: Growing Geographic Footprint – Investment Rationale
Growing Geographic Footprint– Investment Rationale IDH’s regional expansion strategy targets acquisitions in African, Middle Eastern and Asian markets where it can deploy its proven business model and generate accretive value Growing economies and strong demographics Similar healthcare market struct
Slide 47: Growing Geographic Footprint – Nigeria Expansion
Growing Geographic Footprint – Nigeria Expansion In December 2017, IDH further expanded its geographical footprint with an investment in Nigeria, a value-accretive acquisition in a large, fragmented and underpenetrated diagnostic services market where our business model is well-suited to capitalise
Slide 48: Nigeria Expansion
Nigeria Expansion Operational progress in Nigeria expansion with existing branches being refurbished and renovated and with loss-making branches being relocated or closed. In parallel, the Group is actively seeking to optimise its offering, pushing its radiology and pathology services. Branch Renova
Slide 49: Nigeria Branch Roll-Out and Renovations
Nigeria Branch Roll-Out and Renovations Opebi Branch Renovation and Rebranding New Victoria Island Branch Area 11 Branch Renovation and Rebranding Benin Branch Renovation & Rebranding 49 INTEGRATED DIAGNOSTICS HOLDINGS
Slide 50: Strong Leadership & Governance
Strong Leadership & Governance 50 INTEGRATED DIAGNOSTICS HOLDINGS
Slide 51: Governance
Governance A World-Class Board of Directors The majority of members of IDH’s Board of Directors are independent and offer significant experience in the healthcare market, MENA region and investment activities Lord St John of Bletso 1 Prof. Dr. Hend El Sherbini Hussein Choucri 1,2,3,4 Independent Non
Slide 52: Governance
Governance IDH is committed to implementing best practices in corporate governance through the expertise of both the individual Directors and outside parties Internal Audit Procedures While not required to comply Anti-Bribery and Anti Corruption Policy (ABAC) with UK Corporate Governance The Board
Slide 53: Sustainability
Sustainability Founded on the principle of providing quality medical assistance and services to better the lives of individuals and the community at large, IDH views corporate responsibility initiatives as an extension of its core purpose with the aim of improving communities in which it does busine
Slide 54: Appendix
Appendix 54 INTEGRATED DIAGNOSTICS HOLDINGS
Slide 55: IDH Development Story
IDH Development Story Over 40 years of industry experience, complemented by strategic expansion to develop a strong market position across products and geographies. Today IDH has built a scalable platform that is positioned for further strong growth 1979 1990 2008 2011 2012 Establishment of MK Lab A
Slide 56: Covid-19 Internal Protocols and Preventative Measures
Covid-19 Internal Protocols and Preventative Measures In light of the recent covid-19 global outbreak, IDH, in line with World Health Organization (WHO) guidelines, has implemented detailed internal protocols to guarantee the safety of its staff and patients and safeguard its operations. IDH’s respo
Slide 57: IDH
INTEGRATED DIAGNOSTICS HOLDINGS IDH
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