Ramsay Health Care Limited · ASX:RHC
Ramsay Health Care — UBS Healthcare Conference 2007
26 slides from Ramsay Health Care's conference presentation, Nov 2, 2007
Slide 1: UBS Healthcare Conference
For personal use only UBS Healthcare Conference 2 November 2007 Pat Grier, Managing Director
Slide 2: Ramsay Profile
For personal use only RAMSAY PROFILE • Australia’s largest private hospital operator with a growing portfolio of offshore assets 65 hospitals and day surgery facilities across Australia and 3 hospitals in Indonesia More than 7,000 beds More than 20,000 staff 28% of Australian private hospita
Slide 3: Operating in a Growth Industry
OPERATING IN A For personal use only GROWTH INDUSTRY • Private hospital industry offers strong fundamentals Ageing population Private health insurance membership is at historically high levels and growing Bipartisan support for a balanced health care system 3
Slide 4: 2007 Financial Year Overview
2007 FINANCIAL YEAR For personal use only OVERVIEW • Strong profit growth with hospital margin improvement • Very pleasing result – Core EPS up 21%, ahead of guidance of 15%-20% growth • Hospitals performed strongly in every state • Growth achieved despite impact from treating fewer veterans after p
Slide 5: Financial Highlights
For personal use only FINANCIAL HIGHLIGHTS • Revenue from continuing operations up 6% to $2.1 billion • Core net profit from continuing operations up 21% to $110.9 million • Core EPS from continuing operations up 21% to 54.9 cents • Basic EPS up 23% to 52.6 cents • Group EBIDTA margin from continuin
Slide 6: Core EPS Growth
For personal use only CORE EPS GROWTH 6
Slide 7: Delivering Strong Shareholder Returns
DELIVERING STRONG For personal use only SHAREHOLDER RETURNS 7
Slide 8: Strategy for Future Growth
STRATEGY FOR For personal use only FUTURE GROWTH • Continuing to grow earnings at hospital level Solid organic growth to continue Strategy to manage veterans’ hospital transition Further benefits of Affinity acquisition expected • Brownfield expansions Approximately $550 million in expansion
Slide 9: Offshore Expansion Options
OFFSHORE For personal use only EXPANSION OPTIONS • Which markets has Ramsay explored? Asia : high growth potential but purchase multiples too high US : good dynamics but currently too volatile Focusing efforts on expansion opportunities in the UK 9
Slide 10: Why Ramsay Can Be Successful Offshore
WHY RAMSAY CAN For personal use only BE SUCCESSUL OFFSHORE • Ramsay’s management model can be successfully exported – why? Ability to run our business on relatively low revenue base Ability to generate good returns from running a cost efficient business Excellent marketing skills help us grow
Slide 11: Why the UK?
For personal use only WHY THE UK? • Strong growth potential Outsourcing of National Health Services (NHS) to private sector presents significant upside Up to £1 billion per year of NHS outsourcing expected to be available to private sector by 2008 • Private Medical Insurance (PMI) Stable marke
Slide 12: Snapshot of Capio
For personal use only SNAPSHOT OF CAPIO • 4TH largest operator of private hospitals in the UK 22 private hospitals across England with 854 beds and 48 operating theatres 9 Independent Sector Treatment Centres (ISTCs) 2 neurological rehabilitation homes 22-apartment retirement village In-ho
Slide 13: Rationale for Capio
For personal use only RATIONALE FOR CAPIO • Why Capio? • High quality hospital portfolio Majority are purpose built Well equipped with latest diagnostic and treatment technologies • Size of portfolio Good strategic fit Easy to manage, integrate • Forced sale 13
Slide 14: Rationale for Capio
For personal use only RATIONALE FOR CAPIO • Strong executive team Experienced and self sufficient Experience in winning government contracts Strong reputation for clinical excellence Local market expertise Will help maximise earnings 14
Slide 15: Transaction Summary
For personal use only TRANSACTION SUMMARY • Purchase price £193 million • Attractive acquisition multiple of 6.9 x FY2008 EBITDA • Core EPS accretive 2nd full year and beyond • Enhances top-line and operating earnings growth profile • Forced sale • Debt funded, retaining significant flexibility for
Slide 16: Lines of Business
For personal use only 3 LINES OF BUSINESS • Capio generates revenue through three lines of business PMI Self pay (25% of Capio’s revenues in CY06) NHS outsourcing which comprises: − Spot contracts − ISTCs − Patient Choice 16
Slide 17: PMI
For personal use only PMI • Stable PMI market volumes 11% of the population has PMI Market predominantly driven by corporate purchasers • Capio has strong relationships with all PMI providers Broad national coverage Size and scale Strong relationships with all PMI funders (all Capio hospit
Slide 18: NHS Overview
For personal use only NHS OVERVIEW • UK healthcare market dominated by NHS • Spending on private sector outsourcing grown significantly in recent years Government policy to improve NHS services and drive down waiting lists • Up to £1 billion of NHS outsourcing expected to be available to the priva
Slide 19: ISTCs
For personal use only ISTCs • 24 ISTCs introduced in 2003, to generate £2 billion of revenues over 5 years Capio awarded largest, single government outsourcing contract in first phase − Commenced 2005 for initial 5-year term, to generate a total £240 million in revenues. − Aims to deliver 110,000
Slide 20: Patient Choice
For personal use only PATIENT CHOICE • Patient Choice initiative gradually introduced under Government’s Extended Choice Network Scheme over last 12 months, fully implemented by 2008 Aims to provide choice of treatment facility to NHS patients and reduce wait lists Allows patients to choose whet
Slide 21: Critical to Success
For personal use only CRITICAL TO SUCCESS • Critical to the success of Capio are: 1. Operational improvements 2. Bolt-on acquisitions 3. Marketing and lobbying 21
Slide 22: Operational Improvements
OPERATIONAL For personal use only IMPROVEMENTS • Excellent management • Efficiency gains Using Ramsay’s strong management skills to help improve operations Capacity to take on additional work without increasing labour costs and with minimal capex requirements 22
Slide 23: Bolt-on Acquisitions
For personal use only BOLT-ON ACQUISITIONS • Opportunities for single hospital or small group of hospitals (6-10 facilities) • Quicker EPS growth • Similar profile to Capio hospitals 23
Slide 24: Marketing & Lobbying
For personal use only MARKETING & LOBBYING • Ramsay re-branding to begin in coming weeks, post settlement • Strong focus to drive patient choice Local marketing to Primary Care Trusts (PCTs), GPs and patients Working with local commissioners Community awareness programme • Each ISTC manager re
Slide 25: Outlook
For personal use only OUTLOOK • Existing core business tracking well for low double-digit growth in FY08, despite end of DVA contracts • Capio Core EPS accretive in 2nd full year and beyond • Our well-planned growth strategy to create a world class company Building mega referral centres across the
Slide 26: Questions
For personal use only QUESTIONS