Spire Healthcare Group Plc · LSE:SPI
Spire Healthcare — H1 2016 Earnings Presentation
31 slides from Spire Healthcare's earnings presentation, 2016
Slide 1: 2016 Half Year Results Presentation
2016 Half Year Results Presentation www.spirehealthcare.com
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
Agenda Overview 1 Garry Watts, Chairman Financial Review 2 Simon Gordon, CFO Patient Choice 3 Peter Corfield, GCD Outlook 4 Garry Watts, Chairman 3 www.spirehealthcare.com
Slide 4: Overview
Overview 1 Garry Watts, Chairman 4 www.spirehealthcare.com
Slide 5: H1 2016 Overview performance
H1 2016 Overview performance Spire’s H1 2016 performance was in line with expectations Financial performance was positive Revenue increased 4.4% to £469.5m, with underlying growth in all 3 payor categories EBITDA margin was steady at 18%, and excellent cash conversion from EBITDA Adjusted EP
Slide 6: Key factors for the business
Key factors for Overview the business Strong growth in our Self-pay and NHS business – and increased market share in the PMI sector Where patients have a choice, they are increasingly choosing a Spire facility in which to have their treatment We continue to gain market share in our core busine
Slide 7: Our robust business development programme
Our robust business Overview development programme We continue to grow our asset base to service our payor groups better and to meet growth in demand Hospitals – Regional Hospitals – London Our two new Spire hospitals are both on time Spire Bushey – significant project approved, and on budge
Slide 8: Our expanding service offering
Our expanding Overview service offering Innovation & partnership Spire Southampton launched a partnership with Southampton NHS Foundation Trust to provide a new state-of-the-art 3D robot to treat patients with early-stage prostate cancer The da Vinci Surgical System enables keyhole (laparoscopic
Slide 9: Clinical & regulatory update
Clinical & Overview regulatory update The CQC intends to have inspected all UK public & private hospitals by end 2016 Although demanding, we welcome the CQC inspection regime It provides standardised inspections across public and private providers Over time we expect to see improvements in cli
Slide 10: Financial Review
Financial Review 2 Simon Gordon, CFO 10 www.spirehealthcare.com
Slide 11: Trading headlines H1 2016
Financial Trading headlines Review H1 2016 H1 2016 performance was in line with expectations Revenue up overall by 4.4% on H1 2015 to £469.5m Underlying revenue growth of 5.4% with growth across all payor categories EBITDA margin of 18.0% in line with guidance for the full year Margin pressu
Slide 12: Financial highlights H1 2016: revenue
Financial Financial highlights Review H1 2016 2016 2015 Growth £m £m % Group revenue 469.5 449.8 4.4% Disposals - (4.5) Underlying revenue 469.5 445.3 5.4% H1 2016 revenue mix H1 2015 revenue mix 12 www.spirehealthcare.com
Slide 13: Financial highlights H1 2016: EBITDA
Financial Financial highlights Review H1 2016 2016 2015 Growth £m £m % Group EBITDA 84.5 83.4 1.3% H1 2016 H2 2015 H1 2015 EBITDA margin 18.0% 17.6% 18.5% 2015 FY margin 18.1% 13 www.spirehealthcare.com
Slide 14: Revenue and admissions growth
Financial Revenue and Review admissions growth Revenues 2016 2015 Growth % Underlying growth % £m £m PMI 220.7 220.8 - 0.5% Self pay 85.3 77.4 10.2% 10.8% NHS 146.6 135.8 8.0% 10.1% Other 16.9 15.8 7.0% 8.3% Total revenues 469.5 449.8 4.4% 5.4% Admissions 2016 2015 Growth % Underlying growth % ‘000s
Slide 15: NHS revenues analysis
Financial Review NHS revenues analysis Underlying revenues 2016 2015 Growth % £m £m eReferral 115.4 97.8 18.0% NHS Local Contract 31.2 35.3 (11.6%) NHS total revenues 146.6 133.1 10.1% Revenue growth rate H1 2016 H2 2015 H1 2015 % % % eReferral 15.7% 11.0% 12.0% NHS Local Contract (13.6%) (35.9%) 29
Slide 16: Underlying revenue bridge by payor
Financial Underlying revenue Review bridge by payor 2015 Rate Volume OPD 2016 £m £m £m £m £m PMI 219.6 0.7 (1.0) 1.4 220.7 Self pay 77.0 2.7 4.6 1.0 85.3 NHS 133.1 4.9 4.4 4.2 146.6 Totals 429.7 8.3 8.0 6.6 452.6 (Group revenue excl. disposals and other revenues) Day case % admissions 2015 2016 % %
Slide 17: Trading margin analysis
Financial Review Trading margin analysis Costs as % revenues 2016 H1 2015 H1 2015 FY % % % Clinical staff costs 18.4% 18.5% 18.9% Medical fees 11.4% 11.5% 11.4% Other direct costs 22.2% 21.7% 21.7% Cost of sales 52.0% 51.7% 52.0% Costs as % revenues 2016 H1 % 2015 H1 2015 FY % % Gross margin 48.0% 4
Slide 18: Cash flow for the period
Financial Review Cash flow for the period 2016 2015 £m £m Operating cash flow before exceptionals and tax 94.9 70.0 Exceptional items (2.8) (2.7) Taxation (3.2) (0.4) Net cash used in investing activities (71.5) (37.7) Net cash used in financing activities (19.6) (26.0) Net increase / (decrease) in
Slide 19: Cash flow for the period
Financial Review Cash flow for the period 2016 2015 £m £m Operating cash flow before exceptionals and tax 94.9 70.0 EBITDA 84.5 83.4 Cash conversion of EBITDA 112.3% 83.9% 19 www.spirehealthcare.com
Slide 20: Patient Choice
Patient Choice 3 Peter Corfield, Group Commercial Director 20 www.spirehealthcare.com
Slide 21: PMI – share gain in a flat market
PMI – Patient Choice share gain in a flat market Spire will continue to grow its share of the PMI market and continue to work actively with the PMIs to grow the market as a whole Winning market share Growing insured lives Building strategic relationships Work together to deliver “value” Clinic
Slide 22: Self-pay – excellent H1 growth
Self-pay – Patient Choice excellent H1 growth Strong growth in our Self-pay business is expected to continue with patients increasingly choosing to pay for their own treatment Self-pay IP/DC admissions Strong market growth expected to continue 50,000 Spire capitalising on this with 10.2% YoY gro
Slide 23: NHS – strong H1 growth in eReferral
NHS – Patient Choice strong H1 growth in eReferral Strong growth in our NHS business will continue in the medium term, with an increasing proportion from eReferral rather than Local Contract work The overall eReferral market is growing and Local Contract work is also strengthening Spire eReferra
Slide 24: NHS – Tariff and patient choice
NHS – Patient Choice Tariff and patient choice Tariff – NHS Improvement released draft proposal 2 year tariff from April 2017, with only inflation & efficiency impacting 2018/19 tariff Estimated impact on Spire’s NHS revenues if no management action taken 2017/18: Reduction marginally greate
Slide 25: Outlook
Outlook 4 Garry Watts, Chairman 25 www.spirehealthcare.com
Slide 26: FY 2016 guidance unchanged
FY 2016 guidance Outlook unchanged The core Spire proposition continues to be validated An underfunded NHS plus favourable healthcare demographics should drive attractive revenue growth in all payor groups (including the PMI business) over the medium to long term Our focus on patient choice ap
Slide 27: Questions
Questions 27 www.spirehealthcare.com
Slide 28: 2016 Half Year Results Presentation
2016 Half Year Results Presentation www.spirehealthcare.com
Slide 29: Appendix: Reconfirmed guidance (in full)
Appendix: Reconfirmed guidance (in full) 29 www.spirehealthcare.com
Slide 30: FY 2016 guidance unchanged
FY 2016 guidance Appendix unchanged 2016 revenue growth between 3-5% converted at constant EBITDA margin to 2015 Low single digit revenue growth underpinned by investment in capacity, pricing positive PMI PMI market expected to be stable Revenue growth high single digit, improved over 2015, pr
Slide 31: FY 2016 guidance unchanged
FY 2016 guidance Appendix unchanged 2016 revenue growth between 3-5% converted at constant EBITDA margin to 2015 Exceptional Expect £3-5m arising from pre-opening losses in Manchester and Nottingham and further items cost rationalisation initiatives across the business Capital expenditure of bet
Spire Healthcare Group — H1 2016 Earnings Presentation on 6ix