Cleopatra Hospital Company · EGX:CLHO
Cleopatra Hospital — Cleopatra Hospitals Group — FY2020 Earnings Presentation
69 slides from Cleopatra Hospital's earnings presentation, February 2021
Slide 1: Cleopatra Hospitals Group Investor Presentation FY20
Cleopatra Hospitals Group Investor Presentation FY20
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 Unique Investment Story 1 Performance Review 2 Expansion Strategy & Updates 3 Business Updates 4 Governance & Shareholder Information 5 Appendix 6
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 cost integrating leading operating efficiencies and improve margins hospital assets • Scale volume benefits
Slide 5: CHG is a Diversified Healthcare Services Group
CHG is a Diversified Healthcare Services Group • Cleopatra Hospitals Group (the “Group” or “CHG”), is Egypt’s largest private Radiology hospital group by number of hospital beds and operating hospitals and Laboratory consists of six operational hospitals and two polyclinics in addition to a Services
Slide 6: Diversified Service Offering and Revenue Stream
Diversified Service Offering and Revenue Stream CHG delivered strong top- and bottom-line growth with robust margins in 2020 supported by a record- breaking fourth quarter New Revenue Stream – 77%* 2%* 18%* 3%* 2020 OUTPATIENT IVF HOSPITALS POLYCLINICS DIAGNOSTICS PHARMACY CHG operates six leading h
Slide 7: 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 Establish centers of optimizing existing capacity while expanding capacities the main p
Slide 8: 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 signs a partnership CHG signed a Letter of Intent in agreement to manage June 2019 to acquire a 19- bed The first asset, Cleopatra CHG acquired Nile Badrawi CHG signe
Slide 9: 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 10: CHG FY2020 Financial Highlights
CHG FY2020 Financial Highlights CHG delivered a remarkable full-year performance bolstered by a record- breaking fourth quarter which saw the EGP 1,989.5 mn 35% Gross profit margin Group surpass the EGP 600 million mark Consolidated revenues in FY20, EGP 689.6 mn in FY20 for the first time to record
Slide 11: Financial Performance in FY2020
Financial Performance in FY2020 Strong revenue growth on both a quarterly and yearly basis was supported by a sustained recovery in patient volumes following the COVID-19- related slowdown earlier in the year, improving utilization, favourable pricing, and an increasingly optimised service mix. Marg
Slide 12: Key Revenue Drivers (i)
Key Revenue Drivers (i) In 4Q2020, CHG recorded a 13% q-o-q increase in total cases served, with the total for 2H2020 up 30% from cases served in 1H2020. While cases served for the year stood 11% below 2019’s figure, the strong traffic witnessed in the final months of the year is fueling management’
Slide 13: Key Revenue Drivers (ii)
Key Revenue Drivers (ii) Year-on-year revenue growth was seen across all the Group’s segments, apart from Outpatient services, where the Group has been focusing on referrals and utilization from the outpatient clinics and polyclinics without significant price increases. Strong revenue growth in the
Slide 14: Group Revenue Trend
Group Revenue Trend The Group’s performance in 4Q2020 shows volume and revenues returning to historical growth trends. Results for the second half of 2020 were inline with the Group’s most successful monthly performances on record. Group Revenue Trend Strong growth reaching Short-term decrease in Q3
Slide 15: Group Revenue Contribution in FY2020
Group Revenue Contribution in FY2020 On a per hospital basis, Cleopatra Hospital, which includes revenues of around EGP 60 million generated by Queens Hospital, recorded a 6% y-o-y rise in revenues in FY2020, with its contribution to consolidated top-line at 40% for the year. While Cleopatra Hospita
Slide 16: Group Performance Trends
Group Performance Trends Cleopatra Hospital (CHC) Cairo Specialised Hospital (CSH) CAGR: CAGR: 15% 16% 764 808 374 365 677 287 493 41% 42% 43% 244 31% 34% 380 38% 185 30% 332 36% 37% 149 23% 28% 25% 2015 2016 2017 2018 2019 2020 2015 2016 2017 2018 2019 2020 Revenue Gross Profit Revenue Gross Pr
Slide 17: 2020 in Review
2020 in Review January Securing Inventory Business Contingency Patient Pathway Investor Assurance Purchasing and securing of Crisis Management planning Medical Council & Quality engaging investors with PPE, Medication and phase – medical operations protocols handling patient updates and assurance Co
Slide 18: 2020 in Review (Cont'd)
2020 in Review (Cont’d) 2020 JAN – FEB MAR APR MAY JUN SEP OCT – DEC Strong results in COVID-19 crisis CHG rolls out El Katib and Volumes begin to Group acquires Record-breaking January and begins mid-March; extensive mitigation Queens Hospitals recover following Bedaya IVF centre fourth quarter see
Slide 19: Expansion Strategy & Updates
Expansion Strategy & Updates Cleopatra Investor Presentation FY20 19
Slide 20: Expansion strategy
Expansion strategy 1 2 3 4 5 6 Creating Feeder Building Strategic Brownfield / Expanding Creating Strategic Networks & Additional Acquisitions Greenfield Reach Beyond Entities to Serve Expanding Services Capacities in of Operating Expansions Greater Cairo Group’s Scale of Offering Existing Facilitie
Slide 21: Core Theme – Focus on Patient Pathway Capture
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. Ambulance Patient Polyc
Slide 22: Polyclinics Launched in 2019 and Further Expansion Strategy
Launched in 2019 and Now Present in East and West Cairo and a Strategy to further expand With both East and West Cairo ramping up to target utilization and performance, the Group is now looking into further expansions of the model. During the ongoing COVID-19 crisis, the Group’s polyclinics witnesse
Slide 23: New Business Models
New Business Models CHG Polyclinics Ramp- Up Revenues East Cairo (000’s) Covid Lockdowns Hospital Referrals EGP 16mn February March April May June July August September October November December January February March April May June July August September October November December 2019 Revenues West
Slide 24: Expanding Services Offering: Diagnostics
Expanding Services Offering: Diagnostics In line with CHG’s strategy to further diversify its revenue streams and service offering, the Group has been expanding its diagnostics and pharmacy capabilities, with both segments representing areas of future expansion for the Group. Diagnostics 2016-2020 2
Slide 25: Expanding Services Offering: Pharmacy
Expanding Services Offering: Pharmacy In line with CHG’s strategy to further diversify its revenue streams and service offering, the Group has been expanding its diagnostics and pharmacy capabilities, with both segments representing areas of future expansion for the Group. Pharmacy 2016-2020 2021-20
Slide 26: Expanding Services Offering: Home Visits
Expanding Services Offering: Home Visits In an effort to make healthcare accessible to as many Egyptians as possible, CHG has recently launched its new home visits service. The service is a particularly important new addition to the Group’s roster as it allows patients unwilling or unable to visit f
Slide 27: Expanding Services Offering: Telehealth
Expanding Services Offering: Telehealth In early 2020, CHG partnered with Elbalto, Egypt’s first telemedicine mobile app, to offer patients consultation and follow- ups through video calls. CHG Telehealth – Video Call App The new telemedicine services are accessible from the CHG App (available at bo
Slide 28: Expanding Services Offering: Facility Management
Expanding Services Offering: Facility Management The Group also formed a joint venture (JV) with Egypt’s EFS Facilities Services (EFS) to create the Egyptian Healthcare Facilities Services (EHFS) company, the country’s largest healthcare-dedicated facility management business. The Egyptian Healthcar
Slide 29: Building Additional Capacities in Existing Facilities
Building Additional Capacities in Existing Facilities Hospital Renovations & Capacity Additions 10th & 11th floor expansion (20 beds) Façade facelifts: completed at NBH Inpatient wards Started and Al Shorouk, renovations electromechanical with Cleopatra’s ongoing across all upgrades across all plann
Slide 30: Building Additional Capacities in Existing Facilities
Building Additional Capacities in Existing Facilities Nile Badrawy Hospital 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. Cleopatra Investor Presentation FY20 30
Slide 31: 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 in East Cairo. The center will provide the full spectrum of oncology specializations and services including radiotherapy and PET CT in East Cairo, ex
Slide 32: Strategic Acquisition: IVF Segment – Bedaya
Strategic Acquisition of Operating Facilities: IVF Segment – Bedaya CHG signed a Business Transfer Agreement IVF Market Size (USD mn) Services Offered (BTA) to transfer the assets and operations 235 238 of Bedaya for Medical Services, Egypt’s 202 Obstetrics, 1 Andrology, 2 Dermatology, 3 leading Ass
Slide 33: Strategic Acquisition: Alameda Healthcare Group
Strategic Acquisition of Operating Facilities: Alameda Healthcare Group • Alameda is among the leading healthcare service providers in Egypt with its origins first rooted in Professor Salah Khater’s investment in As-Salam International Hospital in Alameda Overview 1999. Alameda is majority owned and
Slide 34: Alameda Group Acquisition – Complementary Network
Alameda Group Acquisition – Complementary Network QUEENS HOSPITAL AL KATIB HOSPITAL DAF As-Salam DAF As-Salam 6th October Maadi Nasr City Katameya (under construction) Cleopatra Investor Presentation FY20 34
Slide 35: Expansion Projects in Brownfield Hospitals
Expansion Projects in Brownfield Hospitals in and around Greater Cairo Expanding Reach Beyond Greater Cairo Brownfield Pipeline The Group is looking to CHG entered into a JV The new facility, not only The Group is currently assessing and penetrate the Bani Suef with Taaleem (Al Nahda sees the Group
Slide 36: 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 37: Recent Business Updates
Recent Business Updates Cleopatra Investor Presentation FY20 37
Slide 38: CHG Medical Council
CHG Medical Council During the third quarter of 2019, 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. Med
Slide 39: 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 40: 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 41: 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 42: 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 43: Digital Transformation and HIS/ERP Rollout Update
Digital Transformation and HIS/ERP Rollout Update The Group sees digitalisation as a key driver of future growth. Over the last few years, CHG has embarked on a digital transformation strategy, which sees the Group looking to introduce the latest digital solutions available on the market to enhance
Slide 44: Consultants Relationship Satisfaction Survey
CHG’s Journey Consultants Relationship Satisfaction Survey – December 2020 87% 87% 85% 82% 79% 77% 75% 91% 90% 97% 92% 95% 95% 96% 14% 15% 13% 13% 10% 10% 11% 9% 8% 8% 5% 5% 4% 3% 1- Relationship & 2- Professional 3- Medical service 4- Resident 5- Punctuality of 6- Would you 7- Overall Communication
Slide 45: Governance & Shareholder Information
Governance & Shareholder Information Cleopatra Investor Presentation FY20 45
Slide 46: 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 47: 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 instead
Slide 48: CLHO Trading Analysis
CLHO Trading Analysis CHG’s Trading Analysis CHG’s Price Performance Since IPO (Rebased to 100) Valuation Multiples 9% 7% 278% % Change in % Change in 53% 14.1x Performance Performance 10.8x 12.3x (YTD) (IPO - Date) EV/EBITDA CHG EGX30 CHG EGX30 Valuation Multiples (x) 600 CHG Volume CHG EGX30 Dec 2
Slide 49: Appendix
Appendix Cleopatra Investor Presentation FY20 49
Slide 50: Additional Information and Financial Disclosures
Additional Information and Financial Disclosures Cleopatra Investor Presentation FY20 50
Slide 51: 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 52: 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 53: 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 54: Financial Performance by Hospital
Financial Performance by Hospital Cleopatra Hospital (CHC) Cairo Specialised Hospital (CSH) CAGR: 13% CAGR: 808 11% 764 374 365 677 42% 43% 287 41% 48% 493 43% 244 34% 31% 38% 30% 34% 31% 318 346 28% 187 281 203 87 261 124 129 112 109 37 103 32 69 87 2017 2018 2019 2020 4Q2019 4Q2020 2017 2018 2
Slide 55: Balance Sheet and Leverage
Balance Sheet and Leverage Balance Sheet Summary Cashflow Movement Cleopatra Investor Presentation FY20 55
Slide 56: Cash Conversion Cycle
Cash Conversion Cycle DIO DSO 47 97 98 41 Dec - 19 Dec - 20 Dec - 19 Dec - 20 DPO Cash Conversion Cycle 120 123 22 18 Dec - 19 Dec - 20 Dec - 19 Dec - 20 Cleopatra Investor Presentation FY20 56
Slide 57: 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 58: Consolidated Income Statement
Consolidated Income Statement All figures in EGP mn 4Q2020 4Q2019 % change FY2020 FY2019 % change Revenues 610.6 511.1 19% 1,989.5 1,798.1 11% Cost of sales (374.8) (337.1) 11% (1,300.0) (1,172.7) 11% Gross profit 235.7 174.0 35% 689.6 625.5 10% Gross Profit Margin 39% 34% 35% 35% General & administ
Slide 59: Consolidated Balance Sheet
Consolidated Balance Sheet All figures in EGP mn 31 December 2019 31 December 2020 Non-current assets Fixed assets 908.5 1,205.2 Intangible assets 413.6 427.6 Right of use 10.2 18.8 Payment under investment - - Investments in associates - 1.1 Total non-current assets 1,332.4 1,652.7 Current assets P
Slide 60: Consolidated Cash Flow Statement
Consolidated Balance Sheet All figures in EGP mn 31 December 2019 31 December 2020 Cash flow from operating activities: Profit before tax 367.5 396.2 Adjustments for: Depreciation 65.0 84.4 Amortization of intangible assets - 4.0 Allowance for impairment of current assets 57.5 51.4 Provision (9.3) 6
Slide 61: Market Overview
Market Overview Cleopatra Investor Presentation FY20 61
Slide 62: 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 63: 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 64: 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 • First level of public • One of the highest • Provide diagno
Slide 65: 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 66: 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 67: 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 FY20 67
Slide 68: 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 FY20 Source: MOHP 2010, World Bank Report “A roadmap to achieve social justice in
Slide 69: 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 FY20 69
Cleopatra Hospitals Group — FY2020 Earnings Presentation on 6ix