Spire Healthcare Group Plc · LSE:SPI
Spire Healthcare — H1 2024 Earnings Presentation
42 slides from Spire Healthcare's earnings presentation, Sep 12, 2024
Slide 1: H1 24 Results Presentation
H1 24 Results Presentation 12 September 2024
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: Spire Healthcare
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Slide 4: Agenda
Agenda H1 24 Overview Justin Ash, Chief Executive Officer H1 24 Financial Review Harbant Samra, Chief Financial Officer Key Themes and Outlook Justin Ash, Chief Executive Officer Q&A 4
Slide 5: H1 24 Overview
H1 24 Overview Justin Ash, Chief Executive Officer
Slide 6: H1 24 – Strong Group financial performance
H1 24 – Strong Group financial performance • Business on track and delivering Deliver strong financial • Group Adjusted EBITDA +10.8% performance • Group Adjusted EBIT +11.7% • Revenue +5.4% * • Private revenue +5.1% • NHS: eRS conversion increasing; revenue +5.2% Drive hospital performance • Adjust
Slide 7: Our strategy: deliver strong financial performance underpinned by running great hospitals
Our strategy: deliver strong financial performance underpinned by running great hospitals and developing new services Drive hospital performance Invest in our workforce Continue growth in our existing hospital Recruit, retain and develop a estate with increasing margins great workforce Deliver stron
Slide 8: H1 24 Performance – Delivering on our strategy
H1 24 Performance – Delivering on our strategy • Reward strategy in progress; similar investment to PY Invest in our workforce • Record low vacancies and staff turnover; 12.7% for clinical colleagues • 39% reduction in agency spend • 98% inspected sites rated ‘Good’ or ‘Outstanding’ Build on quality
Slide 9: Thank you to our colleagues
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Slide 10: H1 24 Financial Review
H1 24 Financial Review Harbant Samra, Chief Financial Officer
Slide 11: Overview
Overview Strong financial progress in H1 Growth in hospitals margins Improved Group earnings and returns 11
Slide 12: Strong Group H1 financial performance
Strong Group H1 financial performance Group Adjusted Adjusted EBITDA EBIT £130.6m £75.7m +10.8% +11.7% Revenue (H1 23: £117.9m) (H1 23: £67.8m) £762.5m +12.7% (H1 23: £676.5m) Adjusted Statutory PBT PAT £26.8m £14.1m +20.2% +11.0% (H1 23: £22.3m) (H1 23: £12.7m) Group comprises Hospitals Business an
Slide 13: Strong Hospital performance and margin improvement
Strong Hospital performance and margin improvement Hospitals Adjusted Adjusted EBITDA EBIT £126.3m £73.2m +6.6% +6.9% Revenue (H1 23: £118.5m) (H1 23: £68.5m) £702.8m +5.4% * (H1 23: £669.8m) Adjusted Adjusted EBITDA Margin EBIT Margin 18.0% 10.4% +0.3ppts +0.2ppts (H1 23: 17.7%) (H1 23: 10.2%) * Sp
Slide 14: Hospital payor performance overview
Hospital payor performance overview Hospitals PMI Self-pay NHS FY23 Modest growth Strong growth Modest growth 2 Year Outlook with mix upside H1 24 outturn in line with expectations • Market strengthening • Core activity on track; • Increasing eRS activity • Network agreements disciplined on price •
Slide 15: Growth in hospital revenue
Growth in hospital revenue Hospitals Total £669.8m Total £702.8m Total +5.4%* £14.0m £14.3m £179.3m £170.5m 25.5% NHS +5.2% 25.5% £485.0m £509.5m Private +5.1% 72.4% 72.5% H1 23 H1 24 Private NHS Other * Excluding Tunbridge Wells from the Hospitals Business results for H1 2023 and H1 2024, revenue g
Slide 16: Private - Building on years of sustained growth
Private - Building on years of sustained growth Hospitals Private Admissions and OP Procedures Private ARPC / £ Private Revenue / £’000 180,000 +6.2% +1.3% +14.7% 4,000 +5.2%* 600,000 160,000 +5.9% +6.6%* +10.4% +5.1% 140,000 +1.9% -1.3% 3,500 +15.2% 500,000 +21.6% 120,000 3,000 +3.9% 400,000 +4.1%
Slide 17: Clear evidence of Self Pay patients switching to PMI
Clear evidence of Self Pay patients switching to PMI Hospitals PMI Self-pay +28% -5% +4% +35% -7% +9% Under 35 35-64 65+ Under 35 35-64 65+ H1 2022 H1 2024 H1 2022 H1 2024 Splitting Spire’s New OP Consultations by age, we see where PMI has grown most and where Self Pay has declined demonstrating som
Slide 18: NHS Focus remains on optimising eRS activity
NHS Focus remains on optimising eRS activity Hospitals NHS admissions and OP procedures NHS ARPC / £ NHS revenue £’000 80,000 +29.0% -0.9% 4,000 +6.4% 200,000 +5.2% 70,000 +1.3% +6.7% +17.1% -16.0% -1.0% 6.1% 3,500 +22.8% 60,000 +2.5% -21.5% 3,000 +4.7% 150,000 50,000 +5.6% 2,500 40,000 2,000 100,00
Slide 19: Cost savings programme on track with momentum into H2
Confidentia l Cost savings programme on track with momentum into H2 Hospitals • Additional savings of >£60m pa by 2026 • 4 streams: Digitalisation, Robotic Process Automation, Centralisation and other A reminder … operational efficiencies • Enables operational efficiency/ flexibility • >£15m cost sa
Slide 20: Vita integrating well and performing in line with expectations
Vita integrating well and performing in line with expectations Vita Adjusted Adjusted EBITDA EBIT £5.1m £3.4m +45.7% +70.0% Revenue (LFL H1 23: £3.5m) (LFL H1 23: £2.0m) £53.0m +28.6% (LFL H1 23: £41.2m) Adjusted Adjusted EBITDA Margin EBIT Margin 9.6% 6.4% +1.1ppts +1.5ppts (LFL H1 23: 8.5%) (LFL H
Slide 21: Group adjusting items of £5.5m
Confidentia l Group adjusting items of £5.5m Group £m H1 24 H1 23 Profit after tax before adjusting items 19.6 14.2 Adjusting items: Business reorganisation and restructuring (1.8) (1.6) Net profit on sale of Tunbridge Wells 3.5 - Remediation of Paterson malpractice issues (4.6) - Integration costs
Slide 22: Cash movement since year end reflects timing and aligns with expectation
Confidentia Cash movement since year end reflects timing and aligns l Group with expectation £m H1 23 H2 23 H1 24 Cash from operating activities 115.8 115.3 126.9 Capex (31.0) (53.4) (51.5) Timing Working capital movement (19.2) 3.7 (14.9) impact Rent on leasehold property (43.2) (49.3) (44.4) Inter
Slide 23: Disciplined Capex approach, targeting financial returns
Disciplined Capex approach, targeting financial returns Group Capex Focus Spire Abergele Clinic Capex investment of £51.5m (H1 23: £31.0m) comprising: • Investment projects: • Spire Abergele Clinic opened • Spire Harrogate Clinic (open later in year) • Spire Claremont minor operations unit • Energy
Slide 24: Group KPIs H1 Outturn
Group KPIs H1 Outturn Group Our view of FY24 at FY23 results H1 24 outturn Hospitals Revenue Hospital business +5.4% (excl. impact of Hospital business >5% growth Tunbridge Wells) Vita revenue >£100m, adjusted EBITDA Vita revenue £53.0m and Adjusted EBITDA Vita c.£10m £5.1m Margin improvement with >
Slide 25: Summary
Summary Strong progress in H1 Growth in hospitals margins Improved Group earnings and returns Further progress expected in H2 25
Slide 26: Key Themes and Outlook
Key Themes and Outlook Justin Ash, Chief Executive Officer
Slide 27: Outlook and focus in H2
Confidentia l Outlook and focus in H2 Group Hospital Revenue Continued growth Hospital Margins Deliver savings Quality Continued focus Vita / other services Integration and future expansion plans Outlook Guidance maintained 27
Slide 28: Hospital payor performance overview
Hospital payor performance overview Hospitals PMI Self-pay NHS Our view of Modest growth Modest growth Strong growth 2024/25 with mix upside (Possible Upside) PMI and SP increasingly looking like one market Private Good growth Overall prospects for Hospitals Business remain strong 28
Slide 29: Hospital margin enhancement & quality agenda
Confidentia l Hospital margin enhancement & quality agenda Hospitals • Generating efficiencies • Savings and digitalisation programmes on track Margins • Significant change programme, going well • Patient journey safety and quality benefits • Continue to embed PSIRF • Celebration of colleagues deliv
Slide 30: Vita and other primary care services
New Vita and other primary care services Services Trialling new community-based healthcare including Community Healthcare GP, physio and mental health Launched Spire branded B2C mental health B2C Mental Health proposition London Doctors Clinic Introducing Spire pathology networks to LDC Occupational
Slide 31: Group trading within guidance range across financial KPIs
Group trading within guidance range across financial KPIs Group Our view of FY24 at FY23 results Hospitals Revenue Hospital business >5% growth Vita revenue >£100m, adjusted EBITDA Vita c.£10m Margin improvement with >£15m of cost Hospitals margin saving, weighted to H2 Group Capex FY24 - £95-105m G
Slide 32: Summary
Summary Strong progress in H1 Growth in hospitals margins Improved Group earnings and returns Further progress expected in H2 Trading within guidance 32
Slide 33: Appendix
S2 Spire Healthcare Appendix Covking after yee
Slide 34: Technical guidance
Technical guidance Group Technical guidance for 2024 Total lease payments c.£102m - £107m (FY23: £100.2m) Depreciation & Amortisation c.£108m - £113m (FY23: £103.6m) Capex* c.£95m - £105m (FY23: £84.4m) Net financing costs c.£100m - £105m (FY23: £91.6m) Tax** Effective corporate tax rate between 25%
Slide 35: Maintained higher ARPC – reflects pricing, private mix and acuity
Maintained higher ARPC – reflects pricing, private Hospitals mix and acuity H1 19 H1 22 H1 23 H1 24 PMI Self-pay NHS PMI Self-pay NHS PMI Self-pay NHS PMI Self-pay NHS IPDC admissions (‘000) 61.6 23.5 46.8 58.5 35.7 37.4 65.7 33.6 42.0 68.9 30.3 41.5 ARPC (£) 2,514 2,905 2,404 2,729 3,961 3,090 2,87
Slide 36: Steady long-term growth of private ARPC
Steady long-term growth of private ARPC Hospitals FY19 FY21 FY22 FY23 H1 24 PMI Self-pay PMI Self-pay PMI Self-pay PMI Self-pay PMI Self-pay IPDC admissions (‘000) 121.6 47.6 104.9 63.7 118.2 69.5 130.6 63.9 68.9 30.3 ARPC (£) 2,533 2,884 2,686 3,683 2,756 3,955 2,896 4,356 2,992 4,618 Total revenue
Slide 37: Portfolio management of payors and specialities by hospital
Portfolio management of payors and specialities by hospital Hospitals to optimise capacity usage Gross profit contribution index Hospital portfolio Hospital portfolio +80% Private revenue • All payors and selected PMI Self-Pay NHS 16 hospitals specialities contribute a Orthopaedics 0.5 1.0 0.3 posit
Slide 38: NHS waiting lists stood at 7.6m pathways in June 2024
NHS waiting lists stood at 7.6m pathways in June 2024 Source: NHS England: https://www.england.nhs.uk/statistics/statistical-work-areas/rtt-waiting-times/ 38
Slide 39: Confidence increasing in our target audience
Confidence increasing in our target audience Which one of the following best describes how you feel about your financial situation at the moment? 10% 8% 8% 6% 11% 8% Finding it very difficult on present income 15% 19% 20% 22% 23% 19% 28% 29% 31% Finding it difficult on present income 36% 36% 40% 38%
Slide 40: UK adults and our target audience - Ease of accessing £5k
UK adults and our target audience - Ease of accessing £5k How easily could you access £5,000 for medical treatment if you felt you really needed to? • Target audience remains more resilient than the population at large 10% 8% 10% 7% 13% 20% 11% 28% 27% 26% 26% It would be impossible 18% 19% 17% 17%
Slide 41: Cash & Borrowings
Cash & Borrowings Group £m 31 Dec 20 31 Dec 21 31 Dec 22 31 Dec 23 30 Jun 24 Bank borrowings 420.8 427.5 324.3 365.3 366.4 Cash 106.3 202.6 74.2 49.6 43.0 Net bank debt 314.5 224.9 250.1 315.7 323.4 £m 31 Dec 20 31 Dec 21 31 Dec 22 31 Dec 23 30 Jun 24 Bank borrowings 420.8 427.5 324.3 365.3 366.4 Le
Slide 42: Further reduction in Bank Debt Leverage and Total Debt Leverage
Further reduction in Bank Debt Leverage and Total Debt Group Leverage (IFRS 16 lease liabilities) Total Debt Leverage (incl IFRS 16 lease liabilities) Bank Debt Leverage 7.0x 6.0x 6.6x 5.0x 5.9x 5.7x 5.9x 5.5x 5.2x 4.9x 4.0x 3.0x 3.9x 3.3x 3.0x 2.0x COVID impact 2.3x 2.2x 2.2x 2.1x 1.0x Acquisition
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