Sonic Healthcare Limited · ASX:SHL
Sonic Healthcare — H1 FY2003 Earnings Presentation
23 slides from Sonic Healthcare's earnings presentation, Feb 26, 2003
Slide 1: Interim Results
Interim Results 6 Months to 31 December 2002 Colin Goldschmidt Managing Director 26 February 2003
Slide 2: Sonic Half Year Summary
Sonic Half Year Summary (1 July – 31 Dec 2002) z 1st half EBITA guidance forecast Achieved z Full year guidance forecasts Revenue, EBITA, margins all on target z 2nd Half performance to date January EBITA above budget February volumes strong z Sonic operations Integration initiatives progr
Slide 3: 2003 Guidance Unchanged
2003 Guidance Unchanged Sonic Guidance Sonic Actuals 1st Half 2003 EBITA $80 - 82M $82.4M Full Year 2003 Revenue $970 - 980M (On track EBITA $172 - 176M after 7 months) EBITA % 17.75 - 18.00%
Slide 4: Revenue
Revenue 6 Months ended 6 Months ended Movement 31.12.02 31.12.01 % $’000 $’000 Total Revenue 485,531 406,634 19.4% z Acquisitions have contributed to revenue growth Clinipath (Aug 2001), SKG (Nov 2001), TDL (April 2002) z Organic revenue growth = ~6% (excludes acquisitions) Australian pathology
Slide 5: Sonic Revenue Split
Sonic Revenue Split Radiology 27% Pathology 73%
Slide 6: Earnings Growth
Earnings Growth 6 Months ended 6 Months ended Movement 31.12.02 31.12.01 % EBITA ($’000) 82,356 63,711 29.3% NPAT ($’000) 19,101 12,088 58.0% Core NPAT ($’000) 48,506 34,711 39.7% Core EPS (cents) 18.5 14.6 26.8% Cash Generation ($’000) 66,167 41,878 58.0% EBITA guidance for full year : $172 – 176 m
Slide 7: EBITA Margins
EBITA Margins 6 Months ended 6 Months ended Sonic 31.12.02 31.12.01 EBITA Margin 17.0% 15.7% EBITDA Margin 21.2% 19.8% z Margin expansion continues Revenue growth with marginal profit Entity cost initiatives Sonic Amalgamation initiatives z On track to achieve full-year EBITA margin guidance (
Slide 8: Pathology Margins
Pathology Margins 6 Months ended 6 Months ended Sonic Pathology 31.12.02 31.12.01 EBITA Margin 18.9% 17.6% z Solid margin performance for half year z Sonic amalgamation initiatives Benchmarking Purchasing IT z All pathology entities performing strongly z Margin expansion set to continue
Slide 9: Radiology Margins
Radiology Margins 6 Months ended 6 Months ended Sonic Imaging 31.12.02 31.12.01 EBITA Margin 17.9% 18.3% z Sonic Imaging entities performing well z Excluding SKG, margins have increased SKG : lower margin acquisition, with margin dilution Acquired in November 2001 Excellent Perth-based practic
Slide 10: Interim Dividend
Interim Dividend Movement 2003 2002 % Interim Dividend $0.08 $0.04 100% Final Dividend (Forecast) $0.16 $0.16 0% Full Year Dividend (Forecast) $0.24 $0.20 20% z Dividend fully franked at 30% z Record Date 11 March 2003 z Payment Date 25 March 2003 z Dividend Reinvestment Plan remains suspended
Slide 11: Balance Sheet Summary
Balance Sheet Summary 6 Months to 6 Months to 31.12.02 31.12.01 Receivables (current) $M 100.3 101.2 Intangibles (net) $M 1,170.6 1,041.7 Amortisation of Intangibles $M 29.4 22.6 Total Interest-bearing Debt $M 608.7 409.1 Interest Cover (EBITA / Net Interest) X 4.5 3.8 Equity $M 838.1 837.5 Gearing
Slide 12: Interest and Amortisation Guidance
Interest and Amortisation Guidance 2003 Financial Year Range ($M) Interest Expense $36.8 – 37.3M Amortisation $59.0 – 59.5M z Interest increase for H1, 2003 (~$1.5 M) Acquisitions $30 million equity injection into SciGen prior to demerger z Guidance assumes no further acquisitions
Slide 13: UK Pathology - TDL
UK Pathology - TDL z Business progressing well z Solid growth in revenue and earnings z Negotiations with NHS progressing z Relocation of laboratory within months Harley Street District of Central London Modern, more efficient design and workflow
Slide 14: Recent Sonic Initiatives
Recent Sonic Initiatives z Sonic Clinical Institute Esoteric Testing laboratory Established at Sonic’s North Ryde, Sydney facility Separate corporate entity, headed by Sonic’s Robyn Winton First Trimester Screening Division – Prof Michael Sinosich Molecular Genetics Division – Dr Brian McD
Slide 15: Pathology Funding Agreement
Pathology Funding Agreement z Agreement Term : 1 July 1999 – 30 June 2004 3 year term, extended by 2 years at 5% growth p.a. z 42 month data to 31 December 2002 Total Medicare pathology spend - $3,498 million Cumulative pathology overspend - $ 13 million Agreement has +/- 0.5% tolerance marg
Slide 16: Radiology Funding Agreement
Radiology Funding Agreement z Negotiations currently in progress z Industry expenditure tracking close to agreed parameters z No fee reduction envisaged z Agreement expires 30 June 2003 z Industry and Government anticipate new “cap” agreement
Slide 17: Medicare Data
Medicare Data GP, Specialist, Pathology, Radiology (6 Months Ended 31.12.02) Episode Medicare $ Volume Growth Growth GP Consultations (1.7%) 4.8% Specialist Consultations 1.5% 2.9% Pathology Referrals 3.7% 5.8% Radiology Referrals (excl. MRI) 3.5% 4.8% z GPs seeing fewer patients but longer consulta
Slide 18: Sonic Referral Analysis
Sonic Referral Analysis Question Are pathology or radiology volumes affected by reduced GP consultations or by increased private billing by GPs? Pathology z GP referral growth to pathology strong z GPs are referring more pathology than Specialists Radiology z Specialist referral growth to radiology
Slide 19: IPN
IPN (formerly Foundation Healthcare) z Ongoing strong revenue flows from IPN Medical Centres New collection centres in all States Major growth in Queensland and South Australia z Sonic holding in IPN increased to ~18.5% Equity parcel purchased from Michael Boyd interests at 5% discount to mark
Slide 20: SciGen Demerger
SciGen Demerger z Transaction Summary De-merged 27 November 2002 Listed on ASX 28 November 2002 Reduction in Sonic capital $38.8 million (14.8 cents per share) Sonic retained 11.6% of SciGen equity z Impact for Sonic Equity injection of $30 million, increasing debt level Improved EBITA p
Slide 21: Sonic Management
Sonic Management z Stable management team z Experienced, with industry expertise z Dedication to customer service z Outstanding Pathologists and Radiologists z “Medical Leadership” culture
Slide 22: Summary
Summary z Solid first half result z Strong start to second half z On track to achieve full year guidance Revenue Earnings Margins z Dependable business model Revenue drivers Profit drivers z Strong and stable management team
Slide 23: SONIC HEALTHCARE
SONIC HEALTHCARE eae HEALTHCARE