Life Healthcare Group Holdings Limited · JSE:LHC
Life Healthcare — FY2023 Earnings Presentation
38 slides from Life Healthcare's earnings presentation, December 2023
Slide 1: Summarised Group results for the 12 months ended 30 September 2023
Summarised Group results for the 12 months ended 30 September 2023 and cash dividend declaration
Slide 2: FY2023 Strong underlying performance
FY2023 | STRONG UNDERLYING PERFORMANCE SA Normalised1 Paid Patient Days Southern Revenue EBITDA (PPDs) Africa (SA) 10.1% 6.6% 9.5% LMI PET-CT testing NeuraCeq® Life Molecular Revenue reimbursed approval granted Imaging (LMI) 18.2% in the US in China AMG Shareholder Expected Alliance Medical
Slide 3: Alliance Medical Group
ALLIANCE MEDICAL GROUP GROUP CHIEF EXECUTIVE: PETE WHARTON-HOOD
Slide 4: AMG disposal announced
FY2023 | AMG DISPOSAL ANNOUNCED POSITIVE TRANSACTION TO UNLOCK SHAREHOLDER VALUE ▪ Proposed transaction to sell AMG to iCON Infrastructure announced on 5 October 2023 ▪ Values AMG at an enterprise value of GBP910 million ▪ The Group will firstly use the proceeds to settle all international debt and
Slide 5: AMG performance snapshot
FY2023 | AMG PERFORMANCE SNAPSHOT CONTINUED GROWTH IN SCAN VOLUMES DROVE PERFORMANCE ▪ AMG classified as held for sale and a discontinued operation in terms of IFRS 5 ▪ Good operational performance during FY2023 ▪ Overall scan volume growth of 7.3%, with UK volumes up 9.5% and Irish volumes up 13.6%
Slide 6: Life Molecular Imaging (LMI)
LIFE MOLECULAR IMAGING (LMI) GROUP CHIEF EXECUTIVE: PETE WHARTON-HOOD
Slide 7: Life Molecular Imaging: NeuraCeq opportunity gaining momentum
FY2023 | LIFE MOLECULAR IMAGING ® NEURACEQ® OPPORTUNITY GAINING MOMENTUM NeuraCeq® is already manufactured on a global scale ▪ NeuraCeq® sales have driven LMI’s revenue growth of 18.2% Active and year-on-year to R656 million 44 contracted sites worldwide ▪ Clinical trial sales +7.7% year-on-year ▪ U
Slide 8: Southern Africa overview
SOUTHERN AFRICA OVERVIEW CEO SOUTHERN AFRICA: ADAM PYLE
Slide 9: Southern Africa: strong activity growth
FY2023 | SOUTHERN AFRICA STRONG ACTIVITY GROWTH ▪ Strong recovery in underlying activities, driven by: Hospitals and complementary FY2023 vs FY2022 ▪ Post-Covid-19 recovery Total PPDs 9.5% ▪ Two significant network deals introduced in January 2023 - largest preferred network provider in SA Acute h
Slide 10: Largest share of networks
FY2023 | LARGEST SHARE OF NETWORKS CHANGING MEDICAL AID PATIENT MIX 2019 2022 2023 ▪ Increase in % of members belonging to preferred networks % of PPDs from 17% 21% 28% networks ▪ Aging medical aid membership: ▪ Reduction in members 20-34 years 2023 vs 2019 ▪ Increase in members >60 years PPDs: 20 –
Slide 11: Acute hospitals
FY2023 | ACUTE HOSPITALS NORMALISING CASE MIX AND NETWORKS DRIVING PERFORMANCE 2019 Occupancy % 2022 Occupancy % 2023 Occupancy % Acute hospitals FY2023 2 vs FY2022 3 13 9 8 19 Revenue growth 10.3% 35 38 Occupancy % 67.6% 39 55 51 27 Admissions 8.1% < 60% 60-69% < 60% 60-69% < 60% 60-69% PPD g
Slide 12: Complementary services
FY2023 | COMPLEMENTARY SERVICES EXCELLENT OPERATING PERFORMANCE Renal dialysis treatments Complementary services FY2023 ▪ Completed TheraMed Nuclear (1 June 2023) 12% 11.1% vs FY2022 and PET Vision (1 August 2023) acquisitions Revenue growth 20.4% 10% ▪ Growth benefitted from results included for
Slide 13: Southern Africa segmental breakdown
FY2023 | SOUTHERN AFRICA SEGMENTAL BREAKDOWN 2023 2022 % ▪ Revenue +10.1% off PPD growth of R'm R'm change 9.5% Revenue 21 985 19 971 10.1 ▪ Acute hospital revenue/PPD +0.1% Hospitals and complementary services 20 665 18 615 11.0 ▪ Good Life Nkanyisa performance Healthcare services 1 320 1 356 (2.7)
Slide 14: Focused capital allocation: key growth projects
FY2023 | FOCUSED CAPITAL ALLOCATION KEY GROWTH PROJECTS Acute hospitals: Technology: Life Vincent Pallotti ▪ Additional 10 ICU / High Care beds ▪ Completed the modernisation of the IT infrastructure Life Westville ▪ Hospital upgrade network ▪ Additional 10 ICU / High Care beds ▪ Continued investment
Slide 15: Financial overview
FINANCIAL OVERVIEW GROUP CFO: PIETER VAN DER WESTHUIZEN
Slide 16: Results overview
FY2023 | RESULTS OVERVIEW Strong Total SA LMI Group Normalised Normalised operational PPDs Revenue Revenue1 EBITDA in SA EBITDA1 results 9.5% 18.2% 10.3% 6.6% 4.4% Earnings AMG Contingent Settlement impacted by impairment & consideration of tax NEPS1,2 non-trading transaction 11.4% in pr
Slide 17: Alliance Medical Group
FY2023 | ALLIANCE MEDICAL GROUP 2023 2022 % R’m R’m change Discontinued operations ▪ Discontinued operations consist of AMG’s operations Revenue 9 319 7 680 21.3 ▪ AMG delivered a good operational performance during Normalised EBITDA 1 862 1 596 16.7 FY2023 delivering over 1.2m scans, 7.3% higher th
Slide 18: Segmental results excluding AMG
FY2023 | SEGMENTAL RESULTS EXCLUDING AMG 2023 2022 % R’m R’m change Revenue from continuing operations 22 641 20 526 10.3 ▪ The Group’s results are presented with reference to Southern Africa 21 985 19 971 10.1 continuing operations, consisting of our southern African operations and our internationa
Slide 19: Corporate costs
FY2023 | CORPORATE COSTS Life Healthcare runs a centralised services operating model in southern Africa where a large number of services are performed on behalf of the business operations. For these services a management fee is charged and in addition most of the operations properties is owned by th
Slide 20: Financial statutory results
FY2023 | FINANCIAL STATUTORY RESULTS 2023 2022 % R’m R’m change ▪ Strong revenue growth in SA of 10.1% driven by 9.5% PPD Revenue 22 641 20 526 10.3 growth includes imaging acquisitions but offset by mix Normalised EBITDA 3 594 3 443 4.4 change Normalised EBITDA margin (%) 15.9 16.8 ▪ SA normalised
Slide 21: Earnings per share
FY2023 | EARNINGS PER SHARE 2023 2022 % change ▪ Total EPS significantly impacted by: Weighted average number of shares (million) 1 442 1 447 (0.3) ▪ Increased finance costs due to 200-400 basis point interest EPS from continuing and discontinued operations (cents) 18.3 105.8 (82.7) rate increases i
Slide 22: Consolidated condensed statement of financial position
FY2023 | CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION 2023 2022 R’m R’m Non-current assets 16 201 34 454 ▪ Strong financial position Property, plant and equipment 10 572 15 566 ▪ Available undrawn facilities of R4.1 billion – post Goodwill 1 879 13 421 disposal R2.7 billion Intangible asse
Slide 23: Cash flow
FY2023 | CASH FLOW 2023 2022 % R’m R’m change Cash generated from continuing operations 3 653 3 340 9.4 Transaction costs paid (12) (1) Net interest paid (543) (430) Tax paid (596) (765) Maintenance capex (1 157) (1 073) Minority distributions (198) (193) Employee share schemes (121) (302) Free cash
Slide 24: Capital allocation and outlook
CAPITAL ALLOCATION AND OUTLOOK GROUP CHIEF EXECUTIVE: PETE WHARTON-HOOD
Slide 25: FY2024 capital allocation and investing for growth
FY2024| CAPITAL ALLOCATION & INVESTING FOR GROWTH Southern Africa International ▪ Facility expansions covering ICU / ▪ LMI HC / GW / acute rehabilitation beds ▪ Small capex for manufacturing Exciting organic growth ▪ Renal and other VBC products kits for NeuraCeq® and innovation ▪ Oncology centre of
Slide 26: FY2024 capital allocation and investing for growth
FY2024| CAPITAL ALLOCATION & INVESTING FOR GROWTH Southern Africa International ▪ Embedded footprint ▪ Small capex requirement for LMI Maintenance Grow and sustain existing ▪ Organic volume growth ▪ Drive optimal occupancy levels capex businesses ▪ Optimise current portfolio of facilities and beds F
Slide 27: Outlook statement FY2024
OUTLOOK STATEMENT | FY2024 ▪ Increase occupancies through network deals, doctor ▪ Grow non-acute services through expansion of recruitment and new VBC products renal, oncology and imaging businesses Southern ▪ Targeting PPD growth of c.3% ▪ Additional imaging transactions Africa ▪ Maintain EBITDA ma
Slide 28: Questions
Lif CR sector QUESTIONS
Slide 29: Annexures
Lif CR sector ANNEXURES
Slide 30: Diversified services with current growth opportunities
STRATEGIC OVERVIEW | SOUTHERN AFRICA DIVERSIFIED SERVICES WITH CURRENT GROWTH OPPORTUNITIES Strategic enablers Capabilities Business lines Acute hospitals Clinical excellence Long-term Care Our people Healthcare Efficient care Occupational Health & Services Employees, nurses, delivery Wellness Conti
Slide 31: Southern African operations summary
FY2023 | SOUTHERN AFRICAN OPERATIONS SUMMARY Activity numbers FY2023 FY2022 Hospital and complementary registered beds 9 186 9 203 Total Hospital and complementary PPDs 2 219 436 2 027 184 Hospital and complementary occupancy 68.1% 61.9% Facilities 48 49 Acute hospitals Registered Beds 8 297 8 271 P
Slide 32: Strategic initiative: quality
STRATEGIC INITIATIVE | QUALITY SOUTHERN AFRICA Patient Adverse Employee Safety ▪ Good overall quality performance with indicators Event Rate Measures returning to pre-COVID-19 levels. 3.0 4.5 ▪ Patient experience on par with prior years 2.8 ▪ PXM score of 8.51 (2022: 8.40) 4.0 2.6 ▪ Employee safety
Slide 33: News flow in the Alzheimer's disease market positive for LMI
FY2023 | LIFE MOLECULAR IMAGING NEWS FLOW IN THE ALZHEIMER’S DISEASE MARKET POSITIVE FOR LMI ▪ Recent news flow regarding Alzheimer’s treatments are positive for diagnostic demand using PET-CT scans and NeuraCeq® ▪ Leqembi™ approved in the US and Japan ▪ Additional Leqembi™ approvals in the EU, UK a
Slide 34: Debt breakdown
FY2023 | DEBT BREAKDOWN FY2022 FY2023 FY2023 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 2 767 6.48 118 2 331 2.73 Capex funding - ZAR 3 212 3 212 7.38 3 717 3 717 4.80 A
Slide 35: Debt repayment schedule
FY2023 | DEBT REPAYMENT SCHEDULE Balance at 30 September Maturing in Maturing in Maturing in Maturing in Maturing in R’m 2023 FY2024 FY2025 FY2026 FY2027 FY2028 or later Bank debt 11 886 (1 577) (9 496)¹ (313) (500) - Lease liabilities 1 116 (415) (111) (117) (63) (410) Total debt 13 002 (1 992) (9
Slide 36: Expected use of proceeds of AMG disposal
EXPECTED USE OF PROCEEDS OF AMG DISPOSAL GBP ZAR Dual use of proceeds Item (millions)1 (millions) 1,2 Retained proceeds Enterprise Value (post-IFRS16) 910 21,307 ▪ Intention to retain a portion of the proceeds Lease Liabilities (64) (1,499) to invest in selected growth initiatives: ▪ SA – FMC3 acqui
Slide 37: Conditions precedent & warranties
CONDITIONS PRECEDENT & WARRANTIES Shareholder Approval ▪ Approval by more than 50% of Life Healthcare shareholders at General Meeting Noteholder Resolution DMTN1 noteholders to pass resolution2 releasing AMG subsidiary as a debt guarantor Conditions Precedent Loan and Banking Agreements Release of A
Slide 38: Salient dates
SALIENT DATES Detailed Terms Announcement 5 October 2023 Expected Distribution of Circular 9 November 2023 General Meeting of Life Healthcare Shareholders 8 December 2023 Regulatory Approvals c. 12 weeks Finalisation and Closing Q1 of CY2024 Summarised Group results for the 12 months ended 30 Septem
Life Healthcare Group Holdings — FY2023 Earnings Presentation on 6ix