Humana Inc. · NYSE:HUM
Humana — Q4 2019 Earnings Presentation
36 slides from Humana's earnings presentation, Feb 13, 2020
Slide 1: Interim report Q4, October-December 2019
Everyone is entitled to a good life. Interim report Q4, October-December 2019 Rasmus Nerman, Ulf Bonnevier, 13 February 2020
Slide 2: Financial highlights Q4
Financial highlights Q4 Revenue and growth • Operating revenue was SEK 1,912m (1,700), an increase by 12% • The organic growth was 0.7% (4.8) Operating profit • Operating profit was SEK 71m (82), a decrease by 13%. • Integration costs was SEK 6m • The effects of IFRS 16 have increased EBIT by SEK 16
Slide 3: Operational highlights Q4
Operational highlights Q4 • Revision of financial targets • Integration of Coronaria Hoiva completed • Humana Quality Index was 93 in the fourth quarter and 94 for the full year (92 in 2018) HQI 100 90 80 70 60 50 89 92 94 40 30 2017 20 2018 10 2019 0 3
Slide 4: Challenging market remains: Individual & Family
Operational highlights Q4 2019 – Individual & Family Challenging market remains • Weak performance in the quarter • Municipalities squeezed finances affect the demand • Challenges with occupancy in children and adolescents segment continuing. Problems focussed to two regions • Internal efforts movin
Slide 5: Personal Assistance: Steady performance continues
Operational highlights Q4 2019 - Personal Assistance Personal Steady performance continues Assistance • Stable revenues but operating profit and margin somewhat lower in the quarter • Market declined 2.4% in 2019 • Investments in quality and efficiency paying off, compensating partly for payroll exp
Slide 6: Elderly Care: Focus on start-up and new projects
Operational highlights Q4 2019 - Elderly Care Focus on start-up and new projects • Stable market demand with high occupancy in our units • Start-up of the new elderly care home under own management in Kungsängen in focus. Occupancy improving well but still not profitable • An increase in the number
Slide 7: Finland: Disappointing quarter
Operational highlights Q4 2019 - Elderly Care Disappointing quarter Finland • Profitability challenges in acquired operation • Improvement program continuing as planned • The Coronaria Hoiva-operation fully integrated, including the Humana brand, during the quarter • Increased staffing requirements
Slide 8: Norway: Stable development in Norway
Operational highlights Q4 2019 – Other Nordics Stable development in Norway • Performance was stable although revenues decreased organically slightly in comparison with the strong Q4 in 2018 • Overall strong momentum in personal assistance (BPA) and disabled care housing services (HOT) • Political d
Slide 9: New financial targets from 2020
New financial targets from 2020 • Profitability An operating margin of 7% over the medium term. • Revenue growth Annual organic revenue growth of 5% over the medium term. Bolt-on acquisitions may generate additional annual growth of 2-3 %. • Capital structure Interest-bearing net debt not exceeding
Slide 10: Operating revenue
Financial summary Q4 2019 Operating revenue 12% • The revenue growth of 12% primarily acquisition driven. Acquired operations contributed SEK 1 912 165m to revenues in the quarter, of which SEK 1 700 Q4, 2018 143m relates to revenues from Coronaria Hoiva Q4, 2019 in Finland • Organic growth was 0.7%
Slide 11: Operating revenue – full year
Financial summary Q4 2019 Operating revenue – full year 11% • Operating revenue grew 11% in the full year, well in line with the financial target 7 467 6 725 2018 • Acquired operations contributed SEK 613m to 2019 revenues in the quarter, of which SEK 443m relates to revenues from Coronaria Hoiva in
Slide 12: Organic growth
Financial summary Q4 2019 Organic growth (%) 10 • The lower organic growth of 0,7% mainly due to lower organic growth rate in Norway and Elderly 5 4,4 4,8 Care 3,4 3,2 2,3 2,5 1,5 0,7 0 -1,7 -4,3 -5 -10 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2017 2018 2019 Group organic growth, % 12
Slide 13: Profitability
Financial summary Q4 2019 -36% Profitability 100 -13% 95 90 Q4 2018 • Operating profit margin was 3.7% (4.8) and 82 Q4 2019 2.9% (4.8) when excluding the effects of 80 71 70 IFRS 16 61 60 50 • The effect of IFRS 16 amounted to SEK 16m (-), 40 due to lower rental costs of SEK 83m and higher 30 deprec
Slide 14: Profitability – full year
Financial summary Q4 2019 -6% -11% Profitability – full year 409 391 369 365 2018 • The effects of IFRS 16 was SEK 46m (-) 2019 • Acquisition expenses and revenues amounted to SEK - 28m (-18), largely related to the acquisition of Coronaria Hoiva. Integration costs for Coronaria Hoiva were SEK 14m (
Slide 15: Individual & Family
Financial summary Q4 2019 -4% Individual & Family 540 518 Operating revenue, SEK m • The revenue decrease is due to lower occupancy in housing solutions for children and adolescents • Negative organic growth of -3.8% (-2.6) • Operating margin at 5.1% (6.8), the decrease is explained by lower occupan
Slide 16: Personal Assistance
Financial summary Q4 2019 3% Personal Assistance 689 707 • Acquisitions, this year and last year, account for most of the increase in revenues • Organic growth of 0.3% (2.2) • Operating profit, EBIT, decreased by 9%, primarily attributable to payroll expenses that Q4 2018 Q4 2019 rose faster than th
Slide 17: Elderly Care
Financial summary Q4 2019 11% 129 143 Elderly Care Operating revenue, SEK m • The new elderly housing units under own management in Staffanstorp and Kungsängen, as well as an increase in tendered contracts contributing to revenue increase of 11% • Start-up costs of SEK 4m for Kungsängen, which Q4 20
Slide 18: Finland
Financial summary Q4 2019 119% 348 Finland Operating revenue, SEK m • The acquisition of Coronaria Hoiva contributed 159 SEK 143m to revenues • Organic growth at 10.7% (6.9) explained by the opening of new individual and family care units and a higher number of customers Q4 2018 Q4 2019 • Operating
Slide 19: Norway
Financial summary Q4 2019 11% 177 196 Norway Operating revenue, SEK m • Revenue increase explained by currency effects • Organic growth at -0.7% (19.0). The negative organic growth in the quarter is attributable to a lower number of customers than during the comparative period as a result of the clo
Slide 20: Financial position
Financial summary Q4 2019 Net debt/EBITDA Financial position 8 7,1 7 Leverage • Net debt increased to SEK 3,712m Leverage excl IFRS 16 (1,378) 6,0 6 5,7 5,4 • With the IFRS 16 effects excluded 5 4,8 net debt increased to 1,577m 4,2 4,1 4,0 (1,378) thanks to good cash flow 4 3,8 3,8 and sale of real
Slide 21: Cash flow
SEK M Q1 2019 Q1 2018 Financial summary Q4 2019 Cash flow from operating activities before changes in working capital 144 97 Changes in working capital Cash flow -50 -114 Q4 2019 Q4 2019 Q4 2018 Cash flow from operating activities excl IFRS 16 95 Cash flow from operating activities -17 157 73 102 be
Slide 22: Thank you!
Thank you!
Slide 23: Appendix
Appendix 23
Slide 24: Humana at a glance
Humana at a glance Critical actor in the Nordic welfare Market leading positions in the Nordics 1 Individual & Family 9,000 1 Personal Assistance Customers ✓ Elderly Care 16,000 Employees Operations and revenue split Clear focus on full responsibility Split of revenues: Norway Outsourcing 11% Indivi
Slide 25: Consolidated income statement
Consolidated income statement Oct-Dec Oct-Dec Jan-Dec Jan-Dec Not SEK m e 2019 2018 2019 2018 Net revenue 1,902 1,700 7,446 6,714 Other operating revenue 10 1 21 11 Operating revenue 3 1,912 1,700 7,467 6,725 Other external expenses 8 -261 -265 -958 -1,044 Personnel costs -1,495 -1,320 -5,784 -5,202
Slide 26: Income statement excluding effects of IFRS 16
Income statement excluding effects of IFRS 16 IFRS 16 Excl. IFRS 16 Excl. Oct-Dec Oct-Dec Jan-Dec Jan-Dec effect IFRS 16 effect IFRS 16 Oct-Dec Oct-Dec Jan-Dec Jan-Dec 2019 2018 2019 2018 SEK m 2019 2019 2019 2019 Operating revenue 1,912 0 1,912 1,700 7,467 0 7,467 6,725 Other external expenses -261
Slide 27: Consolidated balance sheet
Consolidated balance sheet 31 Dec 31 Dec 31 Dec 31 Dec Not Not SEK m e 2019 2018 SEK m e 2019 2018 Assets Equity and liabilities Non-current assets Equity Goodwill 4 3,897 3,168 Share capital 1 1 Other intangible assets 5 8 Other paid-in capital 1,096 1,094 Property, plant and equipment 377 560 Rese
Slide 28: Consolidated cash flow statement
Consolidated cash flow statement Oct-Dec Oct-Dec Jan-Dec Jan-Dec SEK m Note 2019 2018 2019 2018 Profit before tax 8 30 67 249 317 Adjustments for: Depreciation/amortisation 8 86 21 327 70 Net financial items 8 41 15 121 74 Other non-cash items 0 0 0 0 Cash flow from operating activities before chang
Slide 29: Cash flow excluding effects of IFRS 16
Cash flow excluding effects of IFRS 16 IFRS 16 Excl. IFRS 16 Excl. Oct-Dec Oct-Dec Jan-Dec effect IFRS 16 effect IFRS 16 Jan-Dec Oct-Dec Oct-Dec Jan-Dec Jan-Dec 2019 2018 2019 SEK m 2019 2019 2019 2019 2018 Profit before tax 30 3 34 67 249 25 273 317 Adjustments for: Depreciation/amortisation 86 -67
Slide 30: Key ratios
Key ratios Oct-Dec Oct-Dec Jan-Dec Jan-Dec Oct-Dec Oct-Dec Jan-Dec Jan-Dec 2019 2018 2019 2018 2019 2018 2019 2018 Operating revenue 1,912 1,700 7,467 6,725 Average number full-time employees Individual & Family 1 894 2 324 2 026 2 396 Operating margin, % 3.7% 4.8% 4.9% 5.8% Average number full-time
Slide 31: Segments financials
Segments financials Operating revenue by business area Oct-Dec Oct-Dec Jan-Dec Jan-Dec SEK m 2019 2018 % 2019 2018 % Individual & Family 518 540 -4% 2,095 2,188 -4% Personal Assistance 707 689 3% 2,783 2,668 4% Elderly Care 143 129 11% 564 457 23% Finland 348 159 119% 1,204 648 86% Norway 196 177 11
Slide 32: Segments financials, cont’d
Segments financials, cont’d Operating profit by business area Oct-Dec Oct-Dec Jan-Dec Jan-Dec SEK m 2019 2018 % 2019 2018 % Individual & Family 27 37 -28% 168 196 -14% Personal Assistance 37 41 -9% 154 151 2% Elderly Care 0 4 -88% 13 9 42% Finland 9 17 -46% 49 68 -29% Norway 13 20 -32% 59 55 7% Othe
Slide 33: Central costs
Central costs Central costs, SEK m Q4 2019 Q4 2018 2019 2018 Underlying central costs 31 23 100 81 Acquisition related costs 0 13 28 18 Revaluation of earn out 0 0 -5 -9 Effects of IFRS 16 -16 - -46 - Sales of Finnish company - - 0 -2 Sales of Real estate 0 - -4 - Denmark 1 1 0 0 Central overhead co
Slide 34: Financial calendar
Financial calendar Interim report Jan-Mar 2020 7 May 2020 AGM 2020 7 May 2020 Interim report Apr-Jun 2020 20 Aug 2020 Interim report Jul-Sep 2020 6 Nov 2020 Interim report Oct-Dec 2020 11 Feb 2021 34
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Slide 36: For further information, please contact:
For further information, please contact: Ulf Bonnevier, CFO and Vice President, +46 70-164 73 17, ulf.Bonnevier@humana.se Anna Sönne, Head of Investor Relations +46 70-601 48 53, anna.sonne@humana.se