Life Healthcare Group Holdings Limited · JSE:LHC
Life Healthcare — H1 2023 Earnings Presentation
43 slides from Life Healthcare's earnings presentation, May 25, 2023
Slide 1: Unaudited Group interim results for the six months ended 31 March 2023
Unaudited Group interim results for the six months ended 31 March 2023 and cash dividend declaration
Slide 2: Presentation Outline
H1-2023 RESULTS PRESENTATION OUTLINE Page number ▪ H1-2023 Highlights 3 ▪ Strategic Overview 4 ▪ Growth Initiatives: Life Molecular Imaging 7 ▪ Cautionary: AMG 11 ▪ Southern Africa Overview 12 ▪ International Overview 20 ▪ Financial Overview 26 ▪ Outlook 33 ▪ Q&A 35 Unaudited Group results for the s
Slide 3: H1-2023 Highlights: Strong Business Performance
H1-2023 | HIGHLIGHTS STRONG BUSINESS PERFORMANCE SA Normalised1 Paid Patient New TheraMed Fresenius Southern Revenue EBITDA Days (PPDs) network Nuclear Medical Care Africa (SA) 11.6% 13.5% 12.5% deals acquisition2 acquisition3 Alliance AMG Normalised UK PET-CT Irish Seven CDCs4 Medical Revenue
Slide 4: Strategic Overview
STRATEGIC OVERVIEW GROUP CHIEF EXECUTIVE: PETE WHARTON-HOOD
Slide 5: 2026 Strategy: Capital Allocation & Investing for Growth
2026 STRATEGY | CAPITAL ALLOCATION & INVESTING FOR GROWTH Southern Africa International ▪ Embedded footprint ▪ Unique UK + EU footprint Maintenance Grow and sustain existing ▪ Organic volume growth ▪ Strong partnerships with public ▪ Drive optimal occupancy levels health services capex businesses ▪
Slide 6: 2026 Strategy: Capital Allocation & Investing for Growth
2026 STRATEGY | CAPITAL ALLOCATION & INVESTING FOR GROWTH Southern Africa International ▪ TheraMed Nuclear ▪ UK and Europe ▪ Bolsters SA imaging footprint ▪ Bolt-on acquisitions of small ▪ Expand service offering to community-based diagnostic include nuclear imaging (PET-CT clinics in Italy and SPEC
Slide 7: Growth Initiatives: Life Molecular Imaging (LMI)
GROWTH INITIATIVES: LIFE MOLECULAR IMAGING (LMI) GROUP CHIEF EXECUTIVE: PETE WHARTON-HOOD
Slide 8: NeuraCeq Opportunity Gaining Some Momentum
H1-2023 | LIFE MOLECULAR IMAGING NEURACEQ® OPPORTUNITY GAINING SOME MOMENTUM ▪ NeuraCeq® is an FDA1 and EMA2 approved injectable radioisotope used in PET-CT scans to detect beta-amyloid ® deposits in the brain ▪ Alzheimer’s disease diagnosis = dementia + detection of beta- amyloid in the brain (hist
Slide 9: Alzheimer's Treatment Options Are Now Available
H1-2023 | LIFE MOLECULAR IMAGING ALZHEIMER’S TREATMENT OPTIONS ARE NOW AVAILABLE Alzheimer’s patients Alzheimer’s (millions) ▪ Alzheimer’s is a global healthcare challenge affects 1 in 9 95 >65yr people ▪ Progress is being made with regards to drug treatment in US RoW ▪ Once full FDA approval grante
Slide 10: An Alzheimer's Patient's Journey to NeuraCeq and Treatment in 2026
H1-2023 | LIFE MOLECULAR IMAGING AN ALZHEIMER’S PATIENT’S JOURNEY TO NEURACEQ® AND TREATMENT IN 2026 Patients with possible 36m Alzheimer’s dementia (US, EU5 and UK) Most of the clinical trials done Patients deemed eligible to date have focussed on patients with MCI or mild AD so 19m 17m for PET-CT
Slide 11: Cautionary | AMG
CAUTIONARY | AMG ▪ We received a number of unsolicited expressions of interest in AMG ▪ External advisors appointed to assist the Board in assessing the attractiveness of the proposals ▪ Formal engagement with the third parties regarding their expressions of interest is ongoing ▪ The Board is taking
Slide 12: Southern Africa Overview
SOUTHERN AFRICA OVERVIEW CEO SOUTHERN AFRICA: ADAM PYLE
Slide 13: Southern Africa: Recovery Gaining Momentum
H1-2023 | SOUTHERN AFRICA RECOVERY GAINING MOMENTUM Southern African revenue (Rm) 4yr CAGR 11000 Business as usual 635 1.1% ▪ Continued volume recovery 10000 773 9000 657 688 ▪ Normalisation of case mix 8000 609 503 565 736 566 612 11.3% ▪ Two significant new network deals introduced in 7000 4.4% 9
Slide 14: Southern Africa: Recovery Gaining Momentum
H1-2023 | SOUTHERN AFRICA RECOVERY GAINING MOMENTUM Maintenance of existing footprint SA portfolio ▪ R500 million on refurbishment and upgrades ▪ Acquisition1 of TheraMed Nuclear imaging operations ▪ Acquisition2 of the assets and operations of 51 renal Life Vincent Pallotti Hospital ▪ new chemother
Slide 15: Southern Africa: Segmental Breakdown
H1-2023 | SOUTHERN AFRICA SEGMENTAL BREAKDOWN 2023 2022 % ▪ Revenue +11.6% off PPD growth of R'm R'm change 12.5% including additional network Revenue 10 598 9 499 11.6 deals Hospitals and complementary services 9 963 8 811 13.1 ▪ Normalised EBITDA +13.5% Healthcare services 635 688 (7.7) benefittin
Slide 16: Acute Hospitals
H1-2023 | ACUTE HOSPITALS NORMALISING CASE MIX DRIVING PERFORMANCE Acute hospital PPDs 2019 2020 2021 2022 2023 Acute hospitals H1-2023 H1-2022 200 000 175 000 Revenue growth 12.1% 150 000 PPD growth 13.1% PPDs 125 000 Occupancy level 65.5% 57.7% 100 000 75 000 Case mix (medical : surgical) 51
Slide 17: Complementary Services
H1-2023 | COMPLEMENTARY SERVICES EXCELLENT OPERATING PERFORMANCE Renal dialysis treatments 8.0% Complementary services H1-2023 H1-2022 5.8% Revenue growth 26.3% 4.5% 5.0% 4.7% 3.4% Total PPD growth 8.3% 2.1% Mental health PPD growth 11.4% Acute rehabilitation PPD growth 2.7% H2-2020 H1-2020
Slide 18: Complementary Services: Building Out Our Long-Term Imaging Strategy
H1-2023 | COMPLEMENTARY SERVICES BUILDING OUT OUR LONG-TERM IMAGING STRATEGY Imaging services ▪ SA imaging practices performing well Facilities 8 7 Scan volumes - X-rays and others 93 995 33 997 ▪ SA imaging volumes: Scan volumes - MRI and CT 18 177 3 901 ▪ ECR only included from Feb 2022 ▪ Addition
Slide 19: Our Value-Based Care Strategy
H1-2023 | OUR VALUE-BASED CARE STRATEGY STRATEGIC DIRECTION TO LEAD DISRUPTION AND INNOVATION Manage patient populations across their end-to-end healthcare journeys Leading network provider and funder Coordinated, patient-centric journeys partner of choice (enabled by design thinking and product dev
Slide 20: International Overview
INTERNATIONAL OVERVIEW CEO INTERNATIONAL: MARK CHAPMAN
Slide 21: International: Strong Start to the Year
H1-2023 | INTERNATIONAL STRONG START THE YEAR Core business Maintenance of existing footprint Dealing with challenges ▪ Delivered increased revenues ▪ R800 million FY2023 budget for ▪ Inflation at highest level in decades across all geographies replacement capex ▪ Limited tariff relief in some parts
Slide 22: AMG: Performance in Pound Sterling
H1-2023 | INTERNATIONAL AMG: PERFORMANCE IN POUND STERLING ▪ Strong operational results drove GBP million ZAR million 15.5% revenue growth 2023 2022 % 2023 2022 % ▪ Continued growth in PET-CT scan GBP'm GBP'm Change R'm R'm Change volumes in UK Total Revenue 208 185 12.8 4 403 3 813 15.5 ▪ Strong gr
Slide 23: AMG: UK Overview
UK H1-2023 | INTERNATIONAL ▪ Revenue (%) 50 AMG: UK OVERVIEW ▪ Revenue (£‘m) 105 ▪ Good volume growth in DI^ and PET-CT Mix changes UK revenue composition 160 MRI/CT/Other PET-CT/Radiopharmacy ▪ Mobile facilities – slower start to the year 45% 140 PET-CT Mobiles than anticipated 58% 59% 53% 55% 53%
Slide 24: AMG: UK
H1-2023 | INTERNATIONAL AMG: UK PET-CT scans DI scans Molecular Imaging ▪ PET-CT volume growth 9.9% (seasonally weak Dec) ▪ Margin expansion due to volumes ▪ Inflation protection mechanism within PET-CT contract 2020 2020 ▪ 4% tariff increase approved from April 2022 2021 2021 2022 2022 ▪ PET-CT c
Slide 25: AMG: Italy and Ireland
H1-2023 | INTERNATIONAL AMG: ITALY AND IRELAND Italy Italy monthly volumes Italy 27 57 Volumes EBITDA margin [rhs] ▪ Volumes 4.4% below H1-2022 30% ▪ Revenue (£‘m) ▪ FY2022 ASL1 budget included favourable once-off 160 000 ▪ Revenue (%) Italy 25% awards not repeated in H1-2023 150 000 2020 140 000
Slide 26: Financial Overview
FINANCIAL OVERVIEW GROUP CFO: PIETER VAN DER WESTHUIZEN
Slide 27: Results Overview
H1-2023 | RESULTS OVERVIEW Strong Total SA Total AMG Group Normalised Normalised operational PPDs scan volumes Revenue EBITDA EBITA results 12.5% 7.1% 12.9% 13.5% 14.9% NEPS^ Earnings impacted by higher interest cost due to increase in interest rates and settlement of tax matter 1.1% Net
Slide 28: Financial Statutory Results
H1-2023 | FINANCIAL STATUTORY RESULTS 2023 2022 % R’m R’m change Revenue 15 290 13 544 12.9 Southern Africa 10 598 9 499 11.6 International 4 403 3 813 15.5 Growth initiatives 289 232 24.6 Normalised EBITDA 2 690 2 371 13.5 2023 2022 % Southern Africa 1 797 1 578 13.9 R’m R’m change International 89
Slide 29: Financial Statutory Results
H1-2023 | FINANCIAL STATUTORY RESULTS 2023 2022 % R’m R’m change ▪ Strong revenue growth in SA of 11.6% driven by Revenue 15 290 13 544 12.9 12.5% PPD growth includes imaging acquisitions but offset by mix change Normalised EBITDA 2 690 2 371 13.5 ▪ SA EBITDA impacted by R62m related to additional N
Slide 30: Earnings Per Share
H1-2023 | EARNINGS PER SHARE GROUP ▪ EPS/HEPS/NEPS significantly impacted by: % ▪ Increased overall finance costs due to interest rate 2023 2022 change increases Weighted average number of shares (million) 1 443 1 452 (0.6) ▪ Additional interest on SARS VAT matter ▪ Impairment related to closure of
Slide 31: Consolidated Condensed Statement of Financial Position
H1-2023 | CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION GROUP Mar 2023 Sep 2022 R’m R’m Non-current assets 36 274 34 454 ▪ Strong financial position but impacted by an IT hardware failure Property, plant and equipment 15 971 15 566 Goodwill 14 697 13 421 ▪ Available undrawn facilities Intan
Slide 32: Cash Flow
H1-2023 | CASH FLOW GROUP 2023 2022 % R’m R’m change Cash generated from operations 1 116 1 855 (39.8) ▪ Cash generated from operations impacted by an IT Transaction costs paid - (4) hardware failure during March 2023 at a service provider which hosts the Group’s billing Net interest paid (480) (263
Slide 33: Outlook
OUTLOOK GROUP CHIEF EXECUTIVE: PETE WHARTON-HOOD
Slide 34: Outlook Statement | FY2023
OUTLOOK STATEMENT | FY2023 ▪ PPD growth of c.10% ▪ Complete and integrate Southern current acquisitions ▪ EBITDA margin expansion Africa ▪ Capex of c.R1.3 billion Alliance ▪ Volume growth 6-8% ▪ Continue to build CDC Medical ▪ Growing and establishing partnerships with NHS Group CDCs already contrac
Slide 35: Questions
Lif CR sector QUESTIONS
Slide 36: Annexures
Lif CR sector ANNEXURES
Slide 37: 2026 Strategy | Roadmap
2026 STRATEGY | ROADMAP Occupational Hospital- Radio- Care Long-term Mental Renal Acute Acute Outpatient Radio- Health & Rehabilitation Oncology based isotope Continuum Care Wellness Health Dialysis Hospitals Imaging pharmacy Imaging R&D Healthcare Services Life AMG AMG CDCs Life Life Molecular Pres
Slide 38: Southern African Operations Summary
H1-2023 | SOUTHERN AFRICAN OPERATIONS SUMMARY Activity numbers H1-2023 H1-2022 Hospital and complementary registered beds 9 226 9 177 Total Hospital and complementary PPDs 1 074 082 954 493 Hospital and complementary occupancy 65.9% 58.5% Facilities 48 49 Acute hospitals Registered Beds 8 290 8 256
Slide 39: International: AMG Overview
H1-2023 | INTERNATIONAL AMG: OVERVIEW UK Italy Ireland Other geographies ▪ DI1 static sites 35 Spain Netherlands Germany Finland ▪ PET-CT national ▪ Owned clinics 35 contract sites 40 ▪ Static sites 6 ▪ Operating sites 33 ▪ Mobiles 51 ▪ Cyclotron site 1 Poland Norway Switzerland Austria ▪ Cyclotron
Slide 40: Strategic Initiative | Quality: Southern Africa
STRATEGIC INITIATIVE | QUALITY SOUTHERN AFRICA Patient incident Employee incident ▪ Good overall quality performance with indicators rate rate returning to pre-COVID-19 levels. 3.0 5.0 ▪ Patient experience on par with prior years 2.8 4.5 ▪ PXM score of 8.4 2.6 4.0 ▪ Employee safety measures show sig
Slide 41: Strategic Initiative | Quality: International
STRATEGIC INITIATIVE | QUALITY INTERNATIONAL Year-on-year Clinical quality indicator 2023 2022 2021 Target trend UK Patient experience (satisfied and very satisfied) 97.0% 97.0% 96.7% ➔ >90.0% Friends and family score 96.0% 95.7% 96.1% >90.0% Written patient complaints per 10 000 scans 1.6 1.8 1.6
Slide 42: Debt Breakdown
H1-2023 | DEBT BREAKDOWN FY2022 H1-2023 H1-2023 Weighted avg. FY2022 FY2022 Weighted avg. cost Funding Local currency ’m R’m cost of debt % Local currency ‘m R’m of debt % (post-tax) (post-tax) Acquisition funding GBP 118 2 635 5.14 118 2 331 2.73 Capex funding - ZAR 3 453 3 453 6.48 3 717 3 717 4.8
Slide 43: Debt Repayment Schedule
H1-2023 | DEBT REPAYMENT SCHEDULE Balance at Maturing in Maturing in Maturing in Maturing in Maturing in R’m 31 March 2023 FY2023 FY2024 FY2025 FY2026 FY2027 or later Bank debt 11 333 (264) (1 564) ( 8 690) (314) (501) Lease liabilities 2 504 (516) (425) (230) (240) (1 093) Total debt 13 837 General
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