Spire Healthcare Group Plc · LSE:SPI
Spire Healthcare — FY2014 Earnings Presentation
27 slides from Spire Healthcare's earnings presentation, Mar 24, 2015
Slide 1: 2014 Financial Year Results Presentation
2014 Financial Year Results Presentation Tuesday 24th March 2015
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: Outline of Presentation
Agenda Outline of Presentation 1 Introduction Garry Watts, Chairman 2 FY 2014 Spire Financial Review Simon Gordon, CFO 3 Strategy Update Rob Roger, CEO Private (£5bn) (2) 3
Slide 4: Introduction
1 Introduction Garry Watts, Chairman 4
Slide 5: FY 2014 – Highlights of a Transformational Year
Introduction FY 2014 – Highlights of a Transformational Year Satisfactory conclusion to the Competition Commission investigation into the independent hospital sector Successful listing on The London Stock Exchange, with an experienced board now in place Successful positioning of Spire Healthca
Slide 6: Financial Review
2 Financial Review Simon Gordon, CFO 6
Slide 7: FY 2014 Financial Highlights
Financial Review FY 2014 Financial Highlights Key highlights Summary Income Statement Strong revenue growth across all payor Year ended 31 Decemb er categories: PMI, Self-Pay and NHS 2014 2013 % Change % Change Group revenue up 12.0% to £856.0m (£ million) Underlying (3) Revenue 856.0 764.5 12.0
Slide 8: Continued Top-Line Momentum
Financial Review Continued Top-Line Momentum Strong recent revenue growth... ...across all payor categories Revenue Growth 12.0% 2014 +4.5% (+1.4% underlying) 9.5% PMI 2013 -0.4% 6.0% 2014 +9.9% (+7.4% underlying) Self-Pay 3.5% 2013 +8.8% 2014 +28.5% (+27.3% underlying) NHS (1) 2009-12 CAGR FY 2013
Slide 9: Payor Highlights – PMI
Financial Review Payor Highlights – PMI PMI Revenues up by 4.5% to £432.4m (+1.4% underlying(1)) 5 50.5% Volumes up 0.6% at c.124,400 (underlying down 1.6%) 2014 Rates up by 2.4% (+1.3% underlying) Revenues 73.4% of total discharges, increased from 72.5% in 2013 Day Case Recovering work at
Slide 10: Payor Highlights – Self-Pay & NHS
Financial Review Payor Highlights – Self-Pay & NHS Self-Pay Rates up by 0.2% (underlying down 0.8%) 17.1% Revenues up 9.9% Early 2013 impacted by DePuy hip revision procedures artificially increasing rates masking positive rates improvement in underlying recurring case mix Volumes 2014 up 12
Slide 11: Gross Profit Growth Breakdown
Financial Review Gross Profit Growth Breakdown Total VAR % on gross 11.2% 2.4% 5.3% (3.0)% (5.8)% (2.7)% 2.3% Growth profit 9.7% £m 480 460 (11.6) 20.5 (22.1) 440 9.0 42.8 (10.3) 419.4 8.7 420 400 382.4 380 360 340 2013 Gross Volume Yield Outpatient Clinical staff Direct costs Medical fees St Anthon
Slide 12: Positive Earnings Momentum
Financial Review Positive Earnings Momentum Key highlights Adjusted EBITDA Year ended 31 December Adjusted EBITDA growth of 6.1% 2014 2013 % Change £m £m Adjusted EBITDA margin of 18.6% Operating Profit 60.1 99.6 (39.7%) Exceptional items 54.0 11.5 (369.6%) Cost of sales increased by 14.3%, re
Slide 13: Strong Cash Flow Generation Enabling Maintenance of a Robust, Appropriate Capital Structure
Strong Cash Flow Generation Enabling Maintenance of a Financial Review Robust, Appropriate Capital Structure Cash Flow Analysis of cashflows in year Positive operating cash flow of £113.0m (£ million) 2014 2013 Cash conversion (before exceptional items) of Opening cash balance 111.5 133.8 103.1%
Slide 14: Financial Outlook & Guidance
Financial Review Financial Outlook & Guidance Positive payor trends will drive mid to high single digit revenue growth delivered at consistent 2014 Group EBITDA Margin leading to high single digit growth in EPS (based on the 2014 pro forma EPS) Low single digit revenue growth underpinned by the ac
Slide 15: Strategy Update
3 Strategy Update Rob Roger, CEO 15
Slide 16: Consistent execution of strategy
Strategy Update Consistent execution of strategy 16
Slide 17: All Factors point to Continuing Strong Sales and Profit Growth
Strategy Update All Factors point to Continuing Strong Sales and Profit Growth 1 Spire believes that the need for UK healthcare services to be provided by the Demand independent sector will inevitably continue to grow 2 Spire has a clear and focused plan to grow its business from each of its thr
Slide 18: Demand – the Funding Gap Grows and Waiting Lists get Longer
1 Demand – the Funding Gap Grows and Waiting Lists get Strategy Update Longer …..Resulting in a rapidly growing healthcare supply gap Perpetual underlying demand drivers…. – confirmed by the NHS itself in October 2014 (1) NHS Funding Progression Growing and ageing population (Year end March) Increas
Slide 19: Demand – Social Attitudes to Healthcare Provision are Changing as Well
1 Demand – Social Attitudes to Healthcare Provision are Strategy Update Changing as Well View on where people would like to receive NHS-funded treatment (1) NHS Provider Network Infographic 43% 39% 16% 2% ...an NHS service ...a private service ...a non-profit ...or would you not service have a prefe
Slide 20: Payors – PMI
Strategy Update 2 Payors – PMI The PMI market is showing encouraging signs for future growth Insurers are working hard to grow the number of insured lives and we are working with them to introduce improved efficiency to reduce the cost of patient care and hence premiums. Examples include: In Sep
Slide 21: Payors – Self-Pay
Strategy Update 2 Payors – Self-Pay The Self-Pay market will continue to grow Because of rationing, waiting lists or a decision to effectively “self-insure”, people are increasingly choosing to self-pay: In a poll by Ipsos MORI conducted in winter 2013, 51 per cent of people agreed with the stat
Slide 22: Payors - NHS
Strategy Update 2 Payors - NHS NHS business for the Independent Sector will continue whichever party is in Government after the Election Independent Sector capacity is vital to relieve the “waiting list” strains on the NHS: If the IS ceased to do any Choose & Book work or Local Contracting work
Slide 23: Capacity
Strategy Update 3 Capacity Existing capacity is being increased to cater for current and future demand Capital Expenditure rose to £66.6m (£54.5m in 2013) In-patient and daycase discharges up 10.2% to 260,300 patients (2013: 236,200 patients) Acquisition of St Anthony’s Hospital in Cheam Ope
Slide 24: Productivity
Strategy Update 4 Productivity Fixed cost leverage - approximately 50% of the operating costs of the group are not expected to flex directly with activity Economies of scale - increased activity levels have improved our negotiating position with suppliers over time IT platform - we expected to m
Slide 25: Summary & Outlook – Spire's Unique Proposition Remains On-Track
Summary & Outlook – Strategy Update Spire’s Unique Proposition Remains On-Track Spire is uniquely positioned to capture a growing share of a rapidly expanding private healthcare market 1 Fast growing market arising from persistent and growing supply gap 2 Well positioned through well invested and sc
Slide 26: Questions?
Questions? 26 L Spire Healthcare
Slide 27: 2014 Financial Year Results Presentation
2014 Financial Year Results Presentation Tuesday 24th March 2015 27
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