Cleopatra Hospital Company · EGX:CLHO
Cleopatra Hospital — Q3 2019 Earnings Presentation
63 slides from Cleopatra Hospital's earnings presentation, 2019
Slide 1: Cleopatra Hospital Company Investor Presentation 3Q19
Cleopatra Hospital Company Investor Presentation 3Q19
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: Table of Contents
Table of Contents 1. Unique Investment Story 2. Recent Business Updates 3. Expansion Strategy 4. Governance & Shareholder Information Cleopatra Investor Presentation 3Q19 3
Slide 4: 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 integrating hospital assets cost efficiencies and improve • Institutionalizing the healthcare margins indust
Slide 5: CHG financial highlights
CHG financial highlights In 2018, CHG reported solid year-on-year growth in both its top and bottom line, with the EGP 347.4 mn EGP 1,287.1 mn Group generating revenue EBITDA1 in 9M19 with a Consolidated revenues in 9M19 with growth from all its operating 27% Margin 21% growth y-o-y facilities In 20
Slide 6: CHG facilities and staff
CHG facilities and staff Cleopatra Hospital Company, is the largest private hospital group in Egypt and consists of four operational hospitals all in Cairo (2018), namely: 4 (2018) + 2 2 Polyclinics East Cairo Polyclinic is (20191) operational as of February 2019. Cairo Specialized Operational hospi
Slide 7: Clearly Defined Core Growth Strategy
Clearly Defined Core Growth Strategy Integrating the platform Integrating Cleopatra to achieve higher branding, sales and efficiencies marketing approach Geographic expansion in Egypt Enhancing utilization and linked to following the main payor Leveraging payor and optimizing existing relationships
Slide 8: A Scalable Platform with a Track Record of Integrating Acquisitions
A ScalableHospitals, Cleopatra Platform with a Track Record of Integrating Acquisitions CHG signs a partnership agreement to manage The first asset, Cleopatra CHG acquired Nile Badrawi and operate a 198 CHG acquired and started CHG signed a definitive Hospital, was acquired in the Hospital in Octobe
Slide 9: A network of hospitals across Greater Cairo
A network of hospitals across Greater Cairo 4 2 5 Queens Location Mohandesin,Giza Location Heliopolis, Cairo Location Heliopolis # of Beds 121 # of Beds 188 # of Beds 50 6 Al Katib (2) Location Dokki # of Beds 89 3 Location Maadi, Cairo # of Beds 152 1 ⚫ Operating hospitals ⚫ Polyclinics Feeder netw
Slide 10: Well Defined Integration model
Well Defined Integration model Integration, Optimization of Operations Effect on CHG Umbrella Brand Unified Pricing & Unified Financial Optimize operations and Institutionalizing Corporate Centralized Unified Expansion Value Creation Name for Each Positioning Sops & management the Group Governance C
Slide 11: Solid Financial Performance
Solid Financial Performance While the group continues its focus on enhancing and maintaining margins organically , performance in 2019 reflected strong margins despite the addition of four newly inaugurated facilities which are currently in the ramp-up or pre- integration phases. The Group’s hospita
Slide 12: Key Revenue Drivers (i)
Key Revenue Drivers (i) Revenue from inpatient admissions and outpatient visits have continued to report solid year-on-year growth, at 10% and 13% respectively, reflecting CHG’s volume and case mix enhancement strategy across its revenue streams Group Revenue Contribution by No. Patients | ‘000s No.
Slide 13: Key Revenue Drivers (ii)
Key Revenue Drivers (ii) Surgeries and ER visits have also witnessed increasing revenue per visit, which expanded 18% and 13% year-on-year respectively. Overall revenues from both segments have witnessed notable growth ER Visits | 000s No. of Surgeries | 000s 261 247 257 37 36 35 189 183 25 29 2016
Slide 14: Key Revenue Drivers (iii)
Key Revenue Drivers (iii) Revenue per bed at group hospitals have continued to post solid year-on-year growth on the back of management’s utilization enhancement and case mix optimization strategy. Revenue Progression Cleopatra Hospital | EGP mn Nile Badrawi | EGP mn by Hospital 23% 560.4 14% 23
Slide 15: Recent Business Updates
Recent Business Updates Cleopatra Investor Presentation 3Q19 15
Slide 16: Renovations & Upgrades: Nile Badrawy Hospital
Recent Business Updates Renovations & Upgrades Nile Badrawy Hospital Renovations • Façade facelift 10th & 11th floor • Inpatient Wards Renovations expansion (2 floors) (20 beds) • Started Electromechanical upgrades • Upgraded all medical equipment • ICU/CCU Renovation & Upgrade • Operating Rooms Ren
Slide 17: Renovations & Upgrades: Cairo Specialized Hospital
Recent Business Updates Renovations & Upgrades Cairo Specialized Hospital Renovations • Façade facelift • Inpatient Wards Renovations Started Electromechanical upgrades • Upgraded all medical equipment • ICU/CCU Renovation & Upgrade • Operating Rooms Renovations & Upgrade • Radiology Department Upgr
Slide 18: Renovations & Upgrades: Al Shorouk Hospital
Recent Business Updates Renovations & Upgrades Al Shorouk Hospital Renovations • New Clinics Building, availing space for 20 more inpatient during 2020 • Inpatient Wards Renovations Started Electromechanical upgrades • Upgraded all medical equipment • ICU/CCU Renovation & Upgrade • Operating Rooms R
Slide 19: Revenue Cycle Management
Recent Business Updates Revenue Cycle Management Service Conducted -Price, Description & Classification standardized -(Pre-)Approval of all services for credit and insurance clients Revenue Cycle Management • Since the beginning of 2019 , the group has taken strong steps to Monitoring & Reporting Me
Slide 20: CHG Medical Council
CHG Medical Council During the third quarter of the year, the Group officially launched its new Medical Council. The new body will be under the direct supervision and guidance of the Board’s quality committee and will be composed of renowned specialized consultants from across the Group’s hospitals.
Slide 21: Expansion Strategy
Expansion Strategy Cleopatra Investor Presentation 3Q19 21
Slide 22: Expansion strategy
Expansion strategy 1 2 3 4 5 6 Building Additional Strategic Acquisitions Brownfield/Greenfield Expanding reach Creating Strategic Capacities in Existing of Operating Hospitals Expansions beyond Greater Cairo entities to serve facilities Group’s scale of operations Creating Feeder networks Cleopatra
Slide 23: Focus On Patient Pathway Capture To Maximize Share Of Wallet
Core Theme - Focus On Patient Pathway Capture To Maximize Share Of Wallet From Existing Payors Increase number of registered patients through increasing the outpatient network, while a focus on patient pathway capture results in increased network revenue from the core payors. Primary Care Clinics Cl
Slide 24: Feeder Network Expansion: First Two Polyclinics
Feeder Network Expansion Began with the Launch of CHG’s First Two Polyclinics Located in East and West Cairo – The Group Has Recorded Growing Demand at both Facilities Polyclinics act as feeder networks for patient referral for the group hospitals. Specialized across different specialties including
Slide 25: West and East Cairo Polyclinics Launched in 2019
West and East Cairo Polyclinics – The Group’s First Two Facilities Launched in 2019 East Cairo Polyclinic operational as of February 2019 West Cairo Polyclinic operational as of July 2019 Cleopatra Investor Presentation 3Q19 25
Slide 26: New Extension for Al-Shorouk Hospital
New Extension for Al-Shorouk Hospital Al Shorouk hospital expansion In Q2 2018, the group signed Vital Konzept, a leading Engineering & Consultancy Firm to start the process of Drawings for the extension in preparation for releasing the project for tendering with expected timeline of completion 18 m
Slide 27: Strategic Acquisitions of Operating Hospitals (i)
Strategic Acquisitions of Operating Hospitals (i) El Katib Hospital (Dokki, Giza)(1) During September 2017, CHG signed definitive agreements to acquire the real estate assets and the operational assets of a new hospital in West Cairo 89 Hospital Beds Kidney Specialist offering a complementary servic
Slide 28: Strategic Acquisitions of Operating Hospitals (ii)
Strategic Acquisitions of Operating Hospitals (ii) Queens Hospital (Heliopolis, East Cairo) CHG has finalized 50 Hospital Beds in Hospital current and started Heliopolis (Segment focus is on operating Queens A area) gynecology and hospital as of pediatrics March 2019 specialties. CHG in process to C
Slide 29: Strategic Entry Into IVF Segment
Strategic Entry Into IVF Segment • CHG signed a Letter of Intent “LOI” to acquire majority control of an IVF center located in the heart of Cairo – CHG is now finalizing the DD process • A highly scalable specialized center that can generate substantial referrals to CHG’s network of hospitals and ca
Slide 30: Expansion strategy
Expansion strategy 1 2 3 4 5 6 Creating Feeder Building Additional Strategic Acquisitions Creating Strategic networks Capacities in Existing of Operating Hospitals entities to serve facilities Group’s scale of operations Brownfield/ Expanding Greenfield reach beyond Expansions Greater Cairo Cleopatr
Slide 31: Expansions in Brownfield Hospitals in and around Greater Cairo
CHG Is Working on Expansions in Brownfield Hospitals in and around Greater Cairo Brownfield / Greenfield expansion Expanding reach beyond greater Cairo The group is currently assessing Potential hospital is named “ In Bani Suef CHG entered into a Footprint expansion and shortlisting potential New Ca
Slide 32: Expansion strategy
Expansion strategy 1 2 3 4 5 6 Creating Feeder Building Additional Strategic Acquisitions Brownfield/Greenfield Expanding networks Capacities in Existing of Operating Hospitals Expansions reach beyond Greater facilities Cairo Creating Strategic entities to serve Group’s scale of operations Cleopatra
Slide 33: Strategic Initiatives and Entities Created by CHG
Strategic Initiatives and Entities Created by CHG to Enhance Efficiencies in Operation As part of the group’s strategy to leverage synergies and expand its service offerings, CHG is now in the process of creating business operation entities: Cleopatra entity for importing Pharmaceutical Cleopatra Ac
Slide 34: Governance & Shareholder Information
Governance & Shareholder Information Cleopatra Investor Presentation 3Q19 34
Slide 35: Governance (I)
Governance (I) The Board is composed of majority independent directors. Non-Executive Board Members Independent Board Members Dr. Mohamed Awad Tarek Kabil Ahmed Badreldin Dr. Tarek Zahed Tag El Din Image Former Minister of Chairman Vice Chairman Former Minister of Trade and Industry Health Nabil Kam
Slide 36: Governance (II)
Governance (II) ABC No Referral Fees Medical Council • CHG has a zero-tolerance approach to • CHG does not pay any referral fees or • CHG recently launched a group-wide bribery and corruption with a clear anti- kickbacks to physicians and instead has medical council with multiple bribery and anti-co
Slide 37: Key Investor Information
Key Investor Information Cleopatra Hospitals Company’s Care Healthcare Limited’s DFI Shareholders Shareholder Structure Care Healthcare DEG, the German Investment A Development Financial An international financial 38% Limited (Malta) and Development Corporation, Institution partly owned by instituti
Slide 38: Appendix: Q3 2019 Additional Disclosure
Appendix : Q3 2019 Additional Disclosure Cleopatra Investor Presentation 3Q19 38
Slide 39: Per Hospital Performance
Per Hospital Performance Cleopatra CSH CAGR: CAGR: 677 16% 21% 560 287 265 493 41% 494 244 380 38% 41% 41% 185 30% 208 35% 37% 28% 281 25% 29% 140 187 203 231 46 69 87 60 92 2016 2017 2018 9M 2018 9M 2019 2016 2017 2018 9M 2018 9M 2019 Revenue Gross Profit Revenue Gross Profit NBH CAGR: Al Sho
Slide 40: Expansion KPIs Polyclinics – East
Expansion KPIs Polyclinics – East 5th Settlement Polyclinic (East Cairo) Initial Investment Volumes Ramp Up Performance Outlook 12 General Clinics + 3 Specialty Clinics Revenues Real Estate ; • 2019 Monthly ramp 2019 Utilization ; +300 slots • 20 Year rental up reach EGP 3-3.5k • ~50% contract (EGP
Slide 41: Expansion KPIs Polyclinics – West
Expansion KPIs Polyclinics – West Majjarah Polyclinic (West Cairo) Initial Investment Volumes Ramp Up Performance Outlook 15 Clinics Real Estate ; Revenues 2019 Utilization ; • Part of High End • 2020 Monthly ramp • ~10% Commercial up reach EGP 2 +350 slots • 50-100 Patients per Complex /Month day •
Slide 42: Expansion KPIs Queens Hospital
Expansion KPIs Queens Hospital Queens Hospital – East Cairo Investment Scope Performance Outlook Status Quo Scope 2019/2020 Real Estate ; • 50 Bed Hospital • Ongoing Renovations • 25 Year rental contract • Maternity Hospital and refurbishments to (EGP 300k per month + with limited scope enhance hosp
Slide 43: Expansion KPIs EL Katib Hospital
Expansion KPIs EL Katib Hospital El Katib Hospital Investment Scope Performance Outlook Real Estate ; Existing Scope 2019/2020 Revenue • EGP 143mn (December • 89 Bed General • Q4 (November & 2018) Hospital December) EGP 14- Business Transfer • Urology Centre of 15mn in Revenues Agreement for previou
Slide 44: Expansion KPIs Bani Suef Brownfield
Expansion KPIs Bani Suef Brownfield Bani Suef Hospital Investment Scope Performance Outlook JV Agreement ; Medical Scope ; • 90% CHG and 10% • General Hospital with Taaleem 198 Beds Real Estate ; • Partially used as 2020-2021 • Secured long term rent Teaching Hospital (20 • Average Revenue Per of br
Slide 45: Balance Sheet and Leverage
Balance Sheet and Leverage Balance Sheet Summary Highlights EGP 000 Balance Sheet Summary Dec-18 Sep-19 Cash 953 592 Inventory 41 47 Debtors & other Debt balance 358 603 Current Assets 1,353 1,242 Intangible Assets 241 255 Non-Current Assets 704 943 Total Assets 2,298 2,440 Overdraft & Short Term Lo
Slide 46: Balance Sheet and Returns Overview
Balance Sheet and Returns Overview ROCE & ROE Ratios EGP 000 Balance Sheet Summary Dec 2016 Dec 2017 Dec 2018 Capital employed Shareholders equity 565,877 1,330,499 1,603,997 plus minority interest 44,620 55,729 74,720 plus deferred taxes 59,993 64,430 66,869 plus interest-bearing liabilities 378,14
Slide 47: Cash Conversion Cycle
Cash Conversion Cycle DIO DSO DPO Cash Conversion Cycle Cleopatra Investor Presentation 3Q19 47
Slide 48: Cash Flow Walkthrough in 2019
Cash Flow Walkthrough in 2019 Ending consolidated cash balance amounts to EGP 740m as of Sep 2019, of which EGP 148m is earmarked for NBH and CSH upgrade capital expenditure 48 Cleopatra Investor Presentation 3Q19 48
Slide 49: Capex Profile
Capex Profile CAPEX INVESTMENTS Organic Capex Expansion Capex Acquistions Acquisition Investments ; • Katib (143mn Propco & 135mn Acquisitions Opco) • Queens (25mn Opco) • IVF (2020) EGP 250mn 160 Medical & Renovation Capex Investments need to refurbish/enhance Expansion recently added facilities (Q
Slide 50: Appendix: Financial Statements
Appendix : Financial Statements Cleopatra Investor Presentation 3Q19 50
Slide 51: Consolidated Income Statement
Consolidated Income Statement All figures in EGP mn 3Q2019 3Q2018 % change 9M2019 9M2018 % change Revenues 462.0 388.3 19% 1,287.1 1,062.1 21% Cost of sales (295.0) (246.3) 20% (835.2) (697.0) 20% Gross profit 167.0 142.1 18% 451.9 365.1 24% Gross Profit Margin 36% 37% 35% 34% General & administrati
Slide 52: Consolidated Balance Sheet
Consolidated Balance Sheet All figures in EGP mn 31 December 2018 30 September 2019 Non-current assets Fixed assets 560.5 664.5 Intangible assets 241.0 255.1 Payment under investment 143.9 278.6 Total non-current assets 945.4 1,198.2 Current assets Paid under subsidiaries capital increase - 148.5 In
Slide 53: Consolidated Cash Flow Statement
Consolidated Cash Flow Statement All figures in EGP mn 30 September 2018 30 September 2019 Cash flow from operating activities: Profit before tax 288.3 241.7 Adjustments for: Depreciation 32.6 45.8 Allowance for impairment of current assets (3.6) 48.4 Provision (3.6) (5.3) Capital gain/Loss (0.5) (0
Slide 54: Appendix: Market Overview
Appendix : Market Overview Cleopatra Investor Presentation 3Q19 54
Slide 55: 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 % 102 104 104 106 108 113 118 124 130 100.0 110.0 88.0 90.0 92.0 96.0 98.0 8
Slide 56: Egypt Total Hospital Beds
Egypt Total Hospital Beds Number of Beds per 1,000 Citizens Egypt’s Number of Beds Breakdown 2.90 127,600 2.80 2.50 2.30 32,353 2.10 1.49 93,600 Egypt KSA Brazil Turkey Britain USA Public Sector Private Sector Total Beds Market Share in Egypt by # of Commercial Beds CHG, 2% Elaj, 1% Alameda, 2% Germ
Slide 57: Egypt Total Hospital Beds (cont'd)
Egypt Total Hospital Beds (cont’d) No. of Hospital Beds in Egypt (K) Total = 133 Beds 35 98 100% Armed Forces Facilities Specialized Medical Centers Teaching Institutes 80% Highly Fragmented Space Includes Hospitals Owned & Operated by Public Insurance 60% Others General Hospitals 40% C. 50 – 100+ B
Slide 58: Egypt Total Hospital Beds (cont'd)
Egypt Total Hospital Beds (cont’d) Basic Healthcare General Hospitals Specialized Medical Teaching Institutes / Armed Forces Private Hospitals Centers (Public Insurance) Centers Medical Colleges Facilities (Non-Government) • Support basic • First level of public • One of the highest • Provide diagno
Slide 59: Egypt Total Hospital Beds (cont'd)
Egypt Total Hospital Beds (cont’d) Large Hospitals Medium Hospitals Small Hospitals (100+ Beds) (50 – 100 Beds) (<50 Beds) • Large multi super-specialty care centers with • Basic centers with beds (average size of 15 – ability to do high-complexity cases • Multi-specialty centers focused on mid to 2
Slide 60: Greater Cairo Hospital Groups by Commercial Bed Count
Greater Cairo Hospital Groups by Commercial Bed Count Hospital Groups in Cairo (Operational) – Bed Count Hospital Groups in Cairo - # of Operational Hospitals 6431 782 6012 671 6 481 3 4 300 3 3 3 260 1 Market Share in Cairo by # of Commercial Beds CHG, 8% Elaj, 4% Alameda, 7% German Saudi, 4% Andal
Slide 61: 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 3Q19 61
Slide 62: Egypt Healthcare Market Payor Profile
Egypt Healthcare Market Payor Profile Egypt Healthcare Market Payor Profile MOH 16.5% Out of Pocket 71.9% Other 28.1% HIO 5.0% Public Agencies 4.8% Private / Syndicate Insurance 0.5% Corporates/NGOs 1.4% Cleopatra Investor Presentation 3Q19 Source: MOHP 2010, World Bank Report “A roadmap to achieve
Slide 63: Thank you
Thank you INVESTOR RELATIONS C ONTAC TS 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 C leopatra Inves tor P res entation 3Q19 63
Cleopatra Hospital Company — Q3 2019 Earnings Presentation on 6ix