Cleopatra Hospital Company · EGX:CLHO
Cleopatra Hospital — Cleopatra Hospitals Group — Q2 2021 Earnings Presentation
58 slides from Cleopatra Hospital's earnings presentation, 2021
Slide 1: Cleopatra Hospitals Group Investor Presentation 2Q21
Cleopatra Hospitals Group Investor Presentation 2Q21
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements, including, but not limited to, statements concerning expectations, projections, objectives, targets, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans or intentions relating
Slide 3: Contents
CONTENTS 1 Unique Investment Story 2 Performance Review 3 Business Updates 4 Governance & Shareholder Information 5 Appendix
Slide 4: Our Mission & Values
Our Mission & Values — We put our patients first by providing high quality healthcare services with a focus on patient safety and quality of outcomes while enhancing the quality of life of our patients — We focus on creating sustainable growth with positive measurable impact on our stakeholders and
Slide 5: A Unique Investment Story
A Unique Investment Story • Leading integrated healthcare • Group-wide tenders in provider in Egypt with track pharmaceuticals and medical record of acquiring and consumables that drive scale cost integrating leading operating efficiencies and improve margins hospital assets • Scale volume benefits
Slide 6: A Diversified Healthcare Services Group
A Diversified Healthcare Services Group • Cleopatra Hospitals Group is Egypt’s first and largest private hospital group by number of hospital beds and operating hospitals and consists of six operational Other hospitals and two polyclinics in addition to a leading IVF Centre all in Cairo. The Outpa t
Slide 7: CHG's Journey History & Timeline
CHG’s Journey History & Timeline The Evolution of CHG from a Single Asset into one of the Largest Hospital Platform in the Region CHG signed a Letter of Intent in June 2019 to acquire a 19- bed The first asset and the CHG acquired Nile Badrawi CHG signed a definitive specialized IVF center located C
Slide 8: Broad Network Coverage in Greater Cairo
Broad Network Coverage in Greater Cairo Leveraging a growing footprint, CHG continues to penetrate new segments of the population and provide high quality care to currently underserved areas of Greater Cairo Cleopatra Hospitals Group, is the largest private 9 hospital group in Egypt by number of bed
Slide 9: Diversified Service Offering and Revenue Stream
Diversified Service Offering and Revenue Stream CHG reports strong revenue growth in 2Q2021 and 1H2021 supported by growing volumes and improving utilization rates across all its facilities New Revenue Stream 73% 3% 20% 4% as of Q4 2020 OUTPATIENT IVF HOSPITALS* POLYCLINICS DIAGNOSTICS PHARMACY CHG
Slide 10: Clearly Defined Core Growth Strategy
Clearly Defined Core Growth Strategy Integrating the platform to Leveraging payor and achieve higher efficiencies supplier relationships Geographic expansion in Egypt Enhancing utilization and linked to following optimizing existing capacity Establish centers of while expanding capacities and the ma
Slide 11: Healthcare Provider of Choice
Healthcare Provider of Choice Creating a one-stop-shop that is seamlessly integrated across all our assets comes as a result of the Group’s persistence in keeping our patients at the center of everything we do, while at the same time ensuring to drive value to all CHG’s key stakeholders. With that f
Slide 12: Sources of Differentiation
Sources of Differentiation Having been the amongst the first private healthcare providers to recognize the attractiveness of the Egyptian healthcare industry, the Group has played a central role in institutionalizing the sector and promoting its growth and development over the years Capital Resource
Slide 13: CHG 2Q2021 Financial Highlights
CHG 2Q2021 Financial Highlights Cleopatra Hospitals Group continued to build on a strong start to the year, and in the second quarter of 2021 posted another set of record-breaking results supported by healthy volume growth. EGP 643.6 mn EGP 239.5 mn Consolidated revenues in 2Q21 Gross profit margin
Slide 14: 2Q2021 in Review
2Q2021 in Review Cleopatra Investor Presentation 2Q21 14
Slide 15: Financial Performance in 2Q2021
Financial Performance in 2Q2021 The robust top-line growth was supported by a 72% year-on-year increase in cases served during the quarter coupled with improving utilization rates, an increasingly optimised service mix, and the effective ramp up of the Group’s newer revenue verticals. Solid growth a
Slide 16: Key Revenue Drivers (i)
Key Revenue Drivers (i) In line with CHG’s diversification strategy, all the Group’s verticals and segments continued to deliver strong results in 2Q2021. The Group’s polyclinics vertical saw revenues more than triple versus the second quarter of last year, while revenues generated by CHG’s outpatie
Slide 17: Key Revenue Drivers (ii)
Key Revenue Drivers (ii) Volumes expanded 72% year-on-year in 2Q2021, with the Group recording its highest ever second quarter number of cases served. In fact, total cases served were up a solid 8% versus the comparable quarter of 2019 (pre-pandemic). Moreover, despite the quarter including the expe
Slide 18: Patient Volumes Recovery
Patient Volumes Recovery The Group’s two polyclinics continued to witness steady growth throughout the quarter. Strong and steady volume growth displays the effectiveness of the polyclinic model in filling a supply gap for high quality outpatient clinics. Moreover, the two outpatient clinics are als
Slide 19: Group Revenue Contribution in 2Q2021
Group Revenue Contribution in 2Q2021 Top-line growth came on the back of strong performances recorded by all the Group’s more established facilities and was further bolstered by remarkable results posted by the Group’s polyclinics and COVID-19-dedicated facilities, both of which continue to record r
Slide 20: Financial Performance by Hospital (i)
Financial Performance by Hospital (i) Cleopatra Hospital (CHC) Cairo Specialized Hospital (CSH) 764 808 374 365 677 43% 287 493 41% 42% 244 34% 46% 31% 32% 38% 349 36% 38% 28% 30% 32% 23% 281 318 283 51 129 112 81 26 113 36 187 179 65 133 130 69 87 57 13 2017 2018 2019 2020 2Q19 2Q20 2Q21 2017 2018
Slide 21: Financial Performance by Hospital (ii)
Financial Performance by Hospital (ii) Al- Katib Hospital (KHC) Queens Hospital (QHC) +185% +315% 37 124 54 27 60 49 55% 56% 37% 35% 38% 34 62% 41% 30 17 27 29% 13 21 17 29% 46 11 23 5 13 -24% 5 2019 2020 4Q19 2Q20 2Q21 2020 3Q20 4Q20 1Q21 2Q21 Revenue Gross Profit Revenue Gross Profit East & West P
Slide 22: Group Revenue Trend
Group Revenue Trend The Group build on an already strong start to the year and in 2Q2021 reported a record -high top- and bottom-line performance. This was supported by the full recovery of patient volumes which returned to robust year-on-year growth and exceeded pre-COVID-19 levels alongside the st
Slide 23: Half-year Performance Review (1H2021 vs 1H2020 vs 1H2019)
Half-year Performance Review (1H2021 vs 1H2020 vs 1H2019) The Group build on an already strong start to the year and in 2Q2021 reported a record -high top- and bottom-line performance. This was supported by the full recovery of patient volumes which returned to robust year-on-year growth and exceede
Slide 24: Capex Profile
Capex Profile Capex Investments Organic Capex Expansion Capex Acquistions Acquisition Investments: • El Katib (143mn Propco & 135mn Opco) Acquisitions • Queens (25mn Opco) • IVF (2020) EGP 115mn 115 160 Medical & Renovation Capex: • Investments need to refurbish/enhance Expansion recently added faci
Slide 25: 2021 in Review
2021 in Review Cleopatra Investor Presentation 2Q21 25
Slide 26: Renovations, Inaugurations, and Capacities Optimization Across the Group
Renovations, Inaugurations, and Capacities Optimization Across the Group Hospital Renovations Inpatient wards Electromechanical ICU/CCU Operating rooms renovations Upgraded all upgrades across all renovation and renovations and ongoing across all medical equipment hospitals system upgrades technical
Slide 27: Nile Badrawi – Upgrading Quality of Service Offerings
Nile Badrawi – Upgrading Quality of Service Offerings Inpatient Services The Group has completed the renovations of Nile Badrawi Hospital’s tenth and eleventh floors which now feature 24 modern and fully equipped patient suites. 10th & 11th floor expansion (24 beds) Cleopatra Investor Presentation 2
Slide 28: Al – Sherouk Outpatient Clinics Inauguration & Capacity Optimization
Al – Sherouk Outpatient Clinics Inauguration & Capacity Optimization Outpatient Services The Group has successfully launched Al Shorouk Hospital’s new outpatient clinics, that are located adjacently to the hospital’s premises. Housing the hospital’s outpatient clinics services, we have opened up mor
Slide 29: Cleopatra Hospital – Outpatient Clinics Renovations & Capacity Optimization
Cleopatra Hospital – Outpatient Clinics Renovations & Capacity Optimization Outpatient Services The Group has completed the renovations of Cleopatra Hospital’s outpatient clinics, meeting the Group’s premium standards. We are currently studying further optimization strategies within the hospital, in
Slide 30: Cairo Specialized Hospital – Emergency Room & Diagnostics Renovations
Cairo Specialized Hospital – Emergency Room & Diagnostics Renovations & Capacity Optimization Emergency Room & Radiology Departments Upgrades In line with the Group’s strategy to position the hospital as a state-of-the-art Trauma Center of Excellence, setting a new standard of excellence, we began o
Slide 31: New Business Models Queens Hospital conversion to an Oncology CoE
New Business Models Queens Hospital conversion to an Oncology CoE Vision CHG aims to create the first integrated private Oncology Center of Excellence (CoE) in East Cairo. The center will provide the full spectrum of oncology specializations and services including radiotherapy and PET CT in East Cai
Slide 32: Governance & Shareholder Information
Governance & Shareholder Information Cleopatra Investor Presentation 2Q21 32
Slide 33: Governance (I)
Governance (I) The Group’s Board of Directors provides the necessary oversight and combination of expertise to thoroughly oversee the Group’s corporate governance framework, a cornerstone of the Group’s long-term success and value creation. Executive Board Non-Executive Board Members Independent Boa
Slide 34: Governance (II)
Governance (II) OPERATIONS ABC No Referral Fees Medical Council • CHG has a zero-tolerance approach to bribery and • CHG does not pay any referral fees or kickbacks to • CHG recently launched a group-wide medical council corruption with a clear anti -bribery and anti-corruption physicians and instea
Slide 35: CLHO Trading Analysis
CLHO Trading Analysis CHG’s Trading Analysis CHG’s Price Performance Since IPO (Rebased to 100) Valuation Multiples 236% % Change in Performance 35% 14x 13x 11x (IPO - Date) 9x EV/EBITDA CHG EGX30 Valuation Multiples (x) CLHO Volume CHG EGX30 600 Dec-19 Dec-20 Mar-21 Jun-21 500 400 300 33.9x 29.8x 2
Slide 36: Appendix
Appendix Cleopatra Investor Presentation 2Q21 36
Slide 37: COVID-19 Response Protocols (I/IV)
COVID-19 Response Protocols (I/IV) CHG response protocol was developed to ensure the health and safety of its patients and staff while guaranteeing the quality and effectiveness of its medical care despite the ongoing difficulties. Health and Safety Business Continuity From the very beginning, the G
Slide 38: COVID-19 Response Protocols (II/IV)
COVID-19 Response Protocols (II/IV) Back office & Operations Medical Council Responsibilities Training Patient Pathway BCP Key Pillars “To Adopt and Agile Ensuring the safety of our staff and patients Decision-Making Mentality” Disinfection & PPE Space Optimization Potential COVID-19-Positive Patien
Slide 39: COVID-19 Response Protocols (III/IV)
COVID-19 Response Protocols (III/IV) As demand for private COVID- Medical Council 19 treatment centres increased so did the number STEP 1 STEP 2 STEP 3 STEP 4 of suspected cases Patients flowing into the ER’s Patients are triaged and If results are positive and Once the MOHP is informed approaching
Slide 40: COVID-19 Response Protocols (IV/IV)
COVID-19 Response Protocols (IV/IV) In light of the COVID-19 pandemic and in an effort to better serve its patients and aid the Ministry of Health and Population in its fight against the virus, Cleopatra Hospital Group has transformed both Queens Hospital (which was currently undergoing a full renov
Slide 41: Additional Information and Financial Disclosures
Additional Information and Financial Disclosures Cleopatra Investor Presentation 2Q21 41
Slide 42: A Unique Investment Story (I/III)
A Unique Investment Story (I/III) Market Leader in a Growing Market with Strong Long-term Prospects • Highly fragmented market with a small number of institutionalized and strong Number of Beds per 1,000 Citizens Egypt’s Number of Beds Breakdown brand players 2.90 127,600 • Significant under supply
Slide 43: A Unique Investment Story (II/III)
A Unique Investment Story (II/III) Strong Management with Structured Organizational Chart to Oversee All Aspects of the Business • CHG has created a central management Audit Committee Board of Directors team that focuses on setting the overall strategy of the Group • Centralized back-office function
Slide 44: A Unique Investment Story (III/III)
A Unique Investment Story (III/III) Scale and Cost Synergies • Group-wide tenders in pharmaceuticals and medical consumables that drive scale cost efficiencies and improve margins • Scale volume benefits from providing payors with a network of healthcare services solutions • The size of the Group’s
Slide 45: Balance Sheet and Leverage
Balance Sheet and Leverage Balance Sheet Summary Cashflow Movement Balance Sheet Summary (EGP 000') Dec-20 Jun-21 Cash & Cash Equivalent 551 743 Inventory 66 63 Debtors and other debit balances 514 504 Current Assets 1,131 1,311 Fixed Assets 1,205 1,272 Intangible Assets 428 427 Non-Current Assets 2
Slide 46: Cash Conversion Cycle
Cash Conversion Cycle DIO DSO 61 107 84 40 Jun - 20 Jun - 21 Jun - 20 Jun - 21 DPO Cash Conversion Cycle 46 121 100 23 Jun - 20 Jun - 21 Jun - 20 Jun -21 Cleopatra Investor Presentation 2Q21 46
Slide 47: Consolidated Income Statement
Consolidated Income Statement All figures in EGP mn 2Q2021 2Q2020 % change 1H2021 1H2020 % change Revenues 643.6 340.2 89% 1,276.8 843.1 51% Cost of sales (404.1) (244.0) 66% (796.1) (575.7) 38% Gross profit 239.5 96.2 149% 480.7 267.4 80% Gross Profit Margin 37% 28% 38% 32% General & administrative
Slide 48: Consolidated Balance Sheet
Consolidated Balance Sheet All figures in EGP mn 31 December 2020 30 June 2021 Non-current assets Fixed assets 1,205.2 1,271.7 Intangible assets 427.6 426.6 Right of use 18.8 186.6 Payment under investment - 5.7 Investment in associates 1.1 1.2 Total non-current assets 1,652.7 1,891.8 Current assets
Slide 49: Consolidated Cashflow Statement
Consolidated Cashflow Statement All figures in EGP mn 30 June 2020 30 June 2021 Cash flow from operating activities: Profit before tax 141.3 278.7 Adjustments for: Depreciation 40.2 54.5 Amortization of intangible assets - 7.9 Allowance for impairment of current assets 25.6 55.0 Provision (0.0) 0.8
Slide 50: Market Overview
Market Overview Cleopatra Investor Presentation 2Q21 50
Slide 51: Underserved and Under-penetrated Market with Steady Demand Growth
Underserved and Under-penetrated Market with Steady Demand Growth Supply Gap in Egyptian Healthcare Industry Healthcare Expenditure in Egypt Population (millions) Public vs. Private Healthcare Expenditure | EGP bn CAGR: 2.2 % 102 104 104 106 108 113 118 124 130 92.0 96.0 98.0 101.0 110.0 83.0 86.0 8
Slide 52: Egypt Total Hospital Beds (I/III)
Egypt Total Hospital Beds (I/III) No. of Hospital Beds in Egypt (K) Total = 133 Beds 35 98 100% Armed Forces Facilities Specialized Medical Centers Teaching Institutes Highly Fragmented Space 80% Includes Hospitals Owned & Operated by Public Insurance 60% Others General Hospitals 40% C. 50 – 100+ Be
Slide 53: Egypt Total Hospital Beds (II/III)
Egypt Total Hospital Beds (II/III) Basic Healthcare General Hospitals Specialized Medical Teaching Institutes Armed Forces Private Hospitals Centers (Public Insurance) Centers / Medical Colleges Facilities (Non-Government) • Support basic • Fi rs t l evel of public • One of the highest • Provi de di
Slide 54: Egypt Total Hospital Beds (III/III)
Egypt Total Hospital Beds (III/III) Large Hospitals Medium Hospitals Small Hospitals (100+ Beds) (50 – 100 Beds) (<50 Beds) • Large multi super-specialty care centers • Basic centers with beds (average size of with ability to do high-complexity cases 15 – 20 beds) with focus on triage & • Multi-spec
Slide 55: Greater Cairo Hospital Groups by Commercial Bed Count
Greater Cairo Hospital Groups by Commercial Bed Count Hospital Groups in Cairo (Operational) – Bed Count Market Share in Cairo by # of Commercial Beds 7821 6712 481 9% 3003 2604 4% 8% 4% 1% 74% Hospital Groups in Cairo - # of Operational Hospitals 6 3 3 3 CHG Elaj Alameda German Saudi Andaluseya Oth
Slide 56: Greater Cairo Distribution of Hospitals by Commercial Beds
Greater Cairo Distribution of Hospitals by Commercial Beds Distribution of Hospitals in Greater Cairo by # of Commercial Beds Cleopatra Investor Presentation 2Q21 56
Slide 57: Egypt Healthcare Market Payor Profile
Egypt Healthcare Market Payor Profile Egypt Healthcare Market Payor Profile 16.5 72 28.2 5 4.8 0.5 1.4 Out of Pocket MOH HIO Public Agencies Private / Syndicate Insurance Corporates/NGOs Cleopatra Investor Presentation 2Q21 Source: MOHP 2010, World Bank Report “A roadmap to achieve social justice in
Slide 58: Thank you
Thank you INVESTOR RELATIONS CONTACTS SHAREHOLDER INFORMATION Telephone: +2 02 23103771 EGX: CLHO.CA E-mail: ir@cleopatrahospitals..com Listed: June 2016 investors.cleopatrahospitals.com Shares Outstanding: 1.6 billion Cleopatra Investor Presentation 2Q21 58
Cleopatra Hospitals Group — Q2 2021 Earnings Presentation on 6ix