Mlp Saglik Hizmetleri As Class B · BIST:MPARK
Mlp Saglik Hizmetleri As Class B — MLP Care — Non-Deal Roadshow (November 2018)
41 slides from Mlp Saglik Hizmetleri As Class B's roadshow presentation, Nov 12, 2018
Slide 1: Auerbach Grayson Non-deal Roadshow London
Auerbach Grayson Non-deal Roadshow London November 12, 2018 1
Slide 2: MLP Care: The #1 Private Hospital Group in Turkey
MLP Care: The #1 Private Hospital Group in Turkey 17 Cities 31 Hospitals; 5.900+ Beds; More than the #2 2x the size of 2nd Largest 18.000+ 17.500+ Staff and #3 Competitors Combined Competitor 2.000+ 2.100+ Doctors Addresses All Price Segments 3 JCI Accredited Hospitals Revenues:2.6 billion TL 1 in t
Slide 3: Strategic Priorities and Institutional Performance Management
Strategic Priorities and Institutional Performance Management Our Strategic Priorities Are In Line With The Demand-driven Healthcare System Demand Employee Centric INSTITUTIONAL PERFORMANCE MANAGEMENT (IPM’s) • Revenue Group • Costs Group • Patient Satisfaction Group System Trust Centric Patient Cen
Slide 4: Content
Content 1. Recent Developments & Outlook • Regulatory changes, operational and financial updates • Outlook & Prospects 2. Why Invest in MLP Care? • Operates in the Attractive Turkish Healthcare Market • Clear Leader in Private Healthcare Provision • Strong Brand Recognition and Unique Business Model
Slide 5: Recent Developments & Outlook
1. Recent Developments & Outlook • Regulatory Changes • Positive effects of the amendment of SUT prices • All hospital building rent contracts converted to TL as of October • Operational Updates • New openings: The ramp up of Pendik and Mersin hospitals are in line with the plan • Medical tourism an
Slide 6: Regulatory Changes
Regulatory Changes Recent changes will have positive impact on numbers As of July 5, 2018, Healthcare Applications Comminuque Complex surgeries in private sector 1 of the Social Security Institution («SUT») prices are amended. 48% 36% 19% • The prices of inpatient procedures especially more 17% 16
Slide 7: Operational Update
Operational Update Two new hospitals added to our hospital network Pendik Mersin Location İstanbul Mersin Opening Date March 2018 May 2018 Key Statistics 62,000 m2 35,000 m2 New hospitals were opened on budget and schedule The ramp up of the hospitals is in accordance with the plan 7
Slide 8: Operational Update
Operational Update Double digit growth in majority of payor types 47% 71% Other 9% Revenue from PMI, Top-up & Contracted Medical 1% Institutions grew by 33.0% in 9M 2018 Tourism 10% Top-up Insurance continues to lead the growth SSI 30% (92% growth in 9M 2018) Medical Tourism grew by 71% in 9M
Slide 9: Operational Update: Medical tourism
Operational Update Medical tourism revenue grew above 71.4% in 9M 2018 Diversified and Balanced Geography. Patients comes Medical Tourism Revenue Volume & Price (TLm) from: • Europe 38% 32.4% • Middle East and Africa 31% 39.1% 42 224 • Former CIS and the rest 31% 51 Strong marketing through offi
Slide 10: Operational Update: Top-up Insurance
Operational Update MLP Care benefits from the fast growth of Top-up Insurance Market # of People With Insurance (PMI and Top-up) in Turkey – 000s Growth Top-up insurance CAGR (2014-2017) (9M 2017-9M 2018) (since 2014) 2,678 2,703 2,974 Cheaper form of PMI to 2,214 2,281 6.9% 2,554 16.4% cover SSI
Slide 11: Financial Update
Financial Update Comparable Adj. EBITDA grew by 33% in 9M 2018 Revenue (TLm) Adj. EBITDA1 (TLm) 27.2% 32.8% 20.2% 450 24.9% 400 2 32.1% 350 55.6% 300 25.0% 2.251 250 40.7% 353 1,873 200 150 2 282 100 782 102 625 50 73 0 Q3 2017 Q3 2018 9M 2017 9M 2018 Q3 2017 Q3 2018 9M 2017 9M 2018 Comparable Adj
Slide 12: Financial Update
Financial Update All revenue segments posted strong growth in 9M 2018 Domestic Patient Medical Tourism Ancillary Business Revenues Revenues 13.8% 71.4% 47.2% 14.6% 82.7% 84.8% 1,834 224 193 99 74 608 Q3 2018 9M 2018 Q3 2018 9M 2018 Q3 2018 9M 2018 Growth Continued in 9M 2018 Continued to Attract For
Slide 13: Financial Update
Financial Update Strong improvement in both ARPV and ARPP in Q3 2018 Outpatient Revenues (TLm) Inpatient Revenues (TLm) 17.8% 11.3% 35.8% 4.8% (18.0%) 6.5% 224 47 1,096 738 (113) 65 626 985 9M 2017 Volume & Price 9M 2018 9M 2017 Volume & Price 9M 2018 Mix Mix Average Revenue Per Visit (ARPV) Average
Slide 14: Financial Update
Financial Update Adj. EBITDA improves on the back of smart cost management and savings Cost of Service and G&A Expenses as a % of Revenues Material costs as a % of revenue declined, Adj. EBITDA Margin 15.1% 15.7% helped by the patient mix impact and decline in share of laboratory services business
Slide 15: Financial Update
Financial Update FX exposure mitigated by hedging FX BASED NET DEBT (in EUR m) NET DEBT 9M 2018 Before Hedging After Hedging 1 EUR107m EUR47m 204 (TL743m) (TL328m) 26% 44% 56% Percentage 74% 104 TL587m TL959m 81 Local Currency Local Currency 60 Hard Currency Hard Currency 47 Nominal TL1,331m TL1,288
Slide 16: Financial Update
Financial Update Natural FX hedging on the EBITDA driven by Medical Tourism Revenue Hard Hard Currency as % of TLm 9M 2018 Currency Total Revenues 30 Eylül Share of Medical Tourism Revenue in Domestic Hospital Revenue 1,834 - - Foreign Medical Tourism 224 224 10% 2018 Total Revenue Ancillary 193 - -
Slide 17: Financial Update
Financial Update Trade receivables increased in line with the strong revenue growth leading to lower operating cash flow Maintenance Capex (TLm) Total Capex (TLm) Operating Cash Flow / EBITDA 127.2% 2.9% 61.0% 2.5% 65 230 359 47 189 215 9M 2017 9M 2018 9M 2017 9M 2018 9M 2017 9M 2018 % of Revenue %
Slide 18: Outlook & Prospects
Outlook & Prospects 2018 has been a challenging environment due to currency volatility and increasing inflation. Our targets are: Operational targets • Increase operational excellence and adjust our targets upwards • Enhance patient satisfaction • Improve the mix on higher revenue and EBITDA generat
Slide 19: Why Invest In MLP Care?
2. Why Invest In MLP Care? 1 Operates in the Attractive Turkish Healthcare Market 2 Clear Leader in Private Hospital Provision 3 Strong Brand Recognition and Unique Business Model 4 Clinical Excellence and World Class Service Offering 5 Superior Historical Financial Performance 6 Outstanding Platfor
Slide 20: Operates In The Attractive Turkish Healthcare Market
1 Operates In The Attractive Turkish Healthcare Market Turkey is an attractive healthcare market with a growing elderly population and level of affluence, with significant scope for expansion compared to OECD players Turkish Healthcare Spending to Providers1 (TLbn) Growth in Aging Turkish Population
Slide 21: Operates In The Attractive Turkish Healthcare Market
1 Operates In The Attractive Turkish Healthcare Market Private operators have increased their market share, by increasing capacity and by focusing on procedures with higher complexity. Private players now account for 22% of beds, but provide 53% of complex surgeries. Number of Hospital Beds (’000) N
Slide 22: Operates In The Attractive Turkish Healthcare Market
1 Operates In The Attractive Turkish Healthcare Market Supportive government policies have underpinned the expansion of private hospital groups Healthcare system and key participants Universal Healthcare Coverage with Patient Choice Regulation Funding Service Patients Universal healthcare coverage •
Slide 23: Clear Leader in Private Hospital Provision
2 Clear Leader in Private Hospital Provision MLP Care is the largest multi-specialty hospital group in Turkey and the only private player with a truly nationwide network Bed concentration in İstanbul: • MLP: 40% • Acibadem: 67% National and local leader with a network covering • Memorial: 34% • Me
Slide 24: Clear Leader in Private Hospital Provision
2 Clear Leader in Private Hospital Provision MoH is investing in the PPP program, but large private players do not expect to see an impact in the near / mid term Highly illustrative schematic of the Turkish Healthcare Sector PPP success factors Top end of the Private Hospital market City hospitals
Slide 25: Strong Brand Recognition And Unique Business Model Addressing Multiple Price Points
3 Strong Brand Recognition And Unique Business Model Addressing Multiple Price Points Three concepts targeting three different price points with consistently outstanding medical service quality Concept Overview and Positioning 31 Total Hospitals in Portfolio Relative Average Price per Payor Type1 4
Slide 26: Clinical Excellence And World Class Service Offering
4 Clinical Excellence And World Class Service Offering MLP Care benefits from a “Virtuous Circle” of best-in-class service, infrastructure and academic affiliations JCI accreditation SRC1 University affiliations The Gold Standard in Healthcare Globally The Global standard for quality surgical care M
Slide 27: Clinical Excellence And World Class Service Offering
4 Clinical Excellence And World Class Service Offering Top tier talent and patients are attracted to MLP Care’s unrivalled reputation, resulting in a steadily growing market share Ability to attract and retain top-tier physicians… CAGR Key points of attraction Proven track record of physicians recru
Slide 28: Superior Historical Financial Performance
5 Superior Historical Financial Performance EBITDA Growth > Net Sales Growth > CPI (Consumer Price Index) Net Sales (TLm) EBITDA (TLm) %19 %25 CAGR 2014-2017 CAGR 2014-2017 31% 31% 21% 19% 17% 13% 12% 9% 9% 2015 2016 2017 Net Sales Growth EBITDA Growth CPI (Consumer Price Index) 28
Slide 29: Outstanding Platform for Further Growth
6 Outstanding Platform for Further Growth Quick and successful ramp up in greenfields as well as acquisitions with typical range of 12-18 months to EBITDA-neutral hospitals Example of Greenfield Example of Acquisition Batıkent (Oct-2014) Yıldızlı (Sep-2014) Total Investment TL50m Total Investment Co
Slide 30: Outstanding Platform for Further Growth
6 Outstanding Platform for Further Growth Proven track record of greenfield expansions and M&A Total Hospitals 25 26 27 29 31 33 35 At Year End MLP Care has added on average c.400 beds p.a.1 Acquired 6 Opened one 2 New Hospitals Two potential Greenfield through greenfield projects since 2014 hospi
Slide 31: Outstanding Platform for Further Growth
6 Outstanding Platform for Further Growth MLP Care has several avenues to continue its growth trajectory 1 2 Top line growth via the Growth through favourable insurance scheme revenue diversification MLP Care has increased its market share in PMI (private medical insurance) Self-Pay share of tot
Slide 32: Appendix
3. Appendix • Historical Financial Statements • Cost Breakdown – 2017 • Cash Flow Generation – 2017 • Organizational Chart • Capital, Shareholder Structure* & Subsidiaries • Key Historic Milestones 32
Slide 33: Historical Balance Sheet
Historical Balance Sheet Unaudited Audited TLm September 30, 2018 December 31, 2017 Cash and cash equivalents 283 218 Trade receivables 886 750 Inventory 82 51 Short term other assets 303 142 Current assets 1,553 1,161 Fixed assets 1,303 1,220 Deferred tax assets 294 197 Long term other assets 173 1
Slide 34: Historical P&L Statements
Historical P&L Statements Unaudited Audited TLm 9M 2018 Q3 2018 Q3 2017 9M 2017 Revenue 2,251 1,873 782 625 Cost of service (-) (1,902) (1,593) (671) (537) Gross profit 349 281 110 88 General administration expenses (-) (189) (136) (66) (53) Other income from operations 467 255 310 94 Other expenses
Slide 35: Reconciliation from Reported EBITDA to Adjusted EBITDA
Reconciliation from Reported EBITDA to Adjusted EBITDA TLm 9M 2018 9M 2017 Q3 2018 Q3 2017 Net Profit / (Loss) (143) (73) (135) (53) Tax Income from Operations (66) (15) (20) (7) Depreciation and Amortization of Tangible and Intangible Fixed Assets 141 128 51 45 Total Interest Expenses, Net of Inter
Slide 36: Cost Breakdown - 2017
Cost Breakdown - 2017 Adjusted EBITDA 14.5% 15.9% Margin 8.7% Material: Slight increase due to 8.1% change in the revenue mix 4.3% 4.2% 7.0% 7.3% Doctor: Flat as doctor cost is ca. 95% variable 20.2% 18.6% Personnel: Decline on the back of operational leverage Rent: New hospital openings and
Slide 37: Cash Flow Generation - 2017
Cash Flow Generation - 2017 Maintenance Capex 1 (TLm) Capex of New Hospitals (TLm) Free Cash Flow (TLm) 63% 73% 2.6% %2.6 2.6% %2.6 % of Sales Remained flat as a percentage of Continued new hospital Strong free cash flow generation revenues at 2.6% investments maintained x% FCF / EBITDA 1 Incl
Slide 38: Organizational Chart
Organizational Chart Visionary founder & CEO supported by an outstanding management team, leading the company’s exemplary growth; Significant breadth and depth of experience across the senior management and executive level teams Team Structure Field Organization per Hospital Jale Güney Dr. Muharrem
Slide 39: Capital, Shareholder Structure & Subsidiaries
Capital, Shareholder Structure* & Subsidiaries *Shareholding structure after public offering (excluding the 6,827k shares purchased by shareholders from publicly traded portion) Usta Group – Elbaşı Group Lightyear Hujori Sancak İnşaat (Founders) Healthcare B.V. Financieringen B.V. Turizm Nakliyat •
Slide 40: Key Historic Milestones
Key Historic Milestones • 2 hospitals • 3 hospitals • TURKVEN • 1 hospital • MPARK • Founders Dr. • Dr. Usta, Adem Muharrem Usta Elbaşı and • Carlyle opened in • 1 hospital acquired opened in Stocks acquired 40% opened in 53.35% and Adem Sancak Group İzmir, opened in Samsun starting to stake in MLP
Slide 41: IR Contact
Disclaimer This presentation may contain certain forward-looking statements concerning MLP Care’s future performance and should be considered as good faith estimates made by the Company. These forward-looking statements reflect management expectations and are based upon currently available data. Act