Cleopatra Hospital Company · EGX:CLHO
Cleopatra Hospital — Cleopatra Hospitals Group — Q1 2021 Earnings Presentation
72 slides from Cleopatra Hospital's earnings presentation, 2021
Slide 1: Cleopatra Hospitals Group Investor Presentation 1Q21
Cleopatra Hospitals Group Investor Presentation 1Q21
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: A Diversified Healthcare Services Group
A Diversified Healthcare Services Group • Cleopatra Hospitals Group is Egypt’s first and largest private hospital group by Outpatient number of hospital beds and operating hospitals and consists of six operational Pharmacy hospitals and two polyclinics in addition to a leading IVF Centre all in Cair
Slide 6: 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 7: 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 8: Diversified Service Offering and Revenue Stream
Diversified Service Offering and Revenue Stream CHG delivered strong top- and bottom-line growth with record-high margins in 1Q2021 supported by strong growth across all verticals New Revenue Stream as 73% 3% 20% 4% of Q4 2020 OUTPATIENT IVF HOSPITALS* POLYCLINICS DIAGNOSTICS PHARMACY CHG operates s
Slide 9: 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 10: 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 11: 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 12: CHG 1Q2021 Financial Highlights
CHG 1Q2021 Financial Highlights Cleopatra Hospitals Group kicked off the new year on the same positive trajectory it had concluded 2020 on, delivering another quarter of solid financial and EGP 633.2 mn 38% operational results across its entire Gross profit margin Consolidated revenues in 1Q21 facil
Slide 13: Q1 2021 in Review
Q1 2021 in Review Cleopatra Investor Presentation 1Q21 13
Slide 14: Financial Performance in 1Q2021
Financial Performance in 1Q2021 Top-line growth was supported by expanding patient volumes, improving utilization, and an increasingly optimised service mix. Revenue growth for the quarter was bolstered by strong cross-asset referrals in line with the Group’s feeder network strategy. Record-high mar
Slide 15: Key Revenue Drivers (i)
Key Revenue Drivers (i) The year-on-year top-line growth was broad-based with solid volumes and growing revenues across CHG’s Covid-19-dedicated and regular facilities. Moreover, in line with CHG’s diversification strategy, all of the Group’s verticals continued to deliver robust results in 1Q2021.
Slide 16: Key Revenue Drivers (ii)
Key Revenue Drivers (ii) In line with management’s expectations, patient volumes are nearing a full recovery from the COVID-19-related slowdown in the second quarter of 2020, with some segments returning to year-on-year growth in 1Q2021. It is important to note that while our COVID-19-dedicated faci
Slide 17: Patient Volumes Recovery
Patient Volumes Recovery The Group’s polyclinics services continued to witness steady growth throughout the quarter across both facilities. Strong volume growth at the two polyclinics is also helping to drive up referrals to the Group’s main hospitals, which amounted to EGP 5Mn in Q1 2021, as well a
Slide 18: Group Revenue Contribution in 1Q2021
Group Revenue Contribution in 1Q2021 CHG has witnessed a growing contribution coming from its newly added hospitals and clinics as well as new services and segments. In particular, the Group’s polyclinics continue to outperform expectations recording steady growth in volumes and revenues. Moreover,
Slide 19: Financial Performance by Hospital
Financial Performance by Hospital Cleopatra Hospital (CHC) Cairo Specialized Hospital (CSH) CAGR: 13% CAGR: 808 11% 764 374 365 677 42% 43% 287 41% 46% 493 41% 244 34% 31% 32% 38% 30% 34% 318 346 28% 281 269 124 129 112 102 35 112 36 187 203 83 69 87 2017 2018 2019 2020 1Q2020 1Q2021 2017 2018 2
Slide 20: Group Revenue Trend
Group Revenue Trend The Group’s assets managed to maintain their growth trajectory of Q4 2020, on the back of patients’ recovery, throughout 1Q2021 whereby volumes and revenues resume their historical growth trends, further breaking previous all-time highs. Group Revenue Trend The Group closed 2020
Slide 21: 2020 in Review
2020 in Review Cleopatra Investor Presentation 1Q21 21
Slide 22: 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 23: 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 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: Expansion Strategy & Updates
Expansion Strategy & Updates Cleopatra Investor Presentation 1Q21 25
Slide 26: 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 27: 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 28: ANMC's Potential Strategic Acquisition
ANMC’s Potential Strategic Acquisition Transaction Rationale Market Positioning Market Position by Number of Beds in Alexandria** ─ Alexandria is the second largest city in Largest private hospital with a c. 27% market share of Alexandria’s private healthcare market Cairo with fewer high-quality ass
Slide 29: Expansion Projects in Brownfield Hospitals in and around Greater Cairo
Expansion Projects in Brownfield Hospitals in and around Greater Cairo Expanding Reach Beyond Greater Cairo Due to recent regulatory changes in the requirements for hospital ownership for Al Nahda Medical University, CHG is negotiating a management agreement instead of the previously guided ownershi
Slide 30: Strategic Acquisition of Operating Facilities: 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 31: 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 32: 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 33: 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 launched its 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 facilities in
Slide 34: 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 35: 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 36: 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 37: Building Additional Capacities: Nile Badrawy Hospital
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 1Q21 37
Slide 38: Building Additional Capacities: Al Shorouk Hospital
Building Additional Capacities in Existing Facilities Al Shorouk Hospital The Group has successfully launched Al Sherouk Hospital’s new outpatient clinics, that are located adjacently to the hospital’s premises. Cleopatra Investor Presentation 1Q21 38
Slide 39: Building Additional Capacities: Cleopatra Hospital
Building Additional Capacities in Existing Facilities Cleopatra Hospital The Group has completed the renovations of Cleopatra Hospital’s outpatient clinics, meeting the Group’s premium standards Cleopatra Investor Presentation 1Q21 39
Slide 40: Building Additional Capacities: Cairo Specialized Hospital
Building Additional Capacities in Existing Facilities Cairo Specialized Hospital The Group has completed the renovations of Cairo Specialized Hospital’s Emergency Room, setting a new standard of excellence. Cleopatra Investor Presentation 1Q21 40
Slide 41: Recent Business Updates
Recent Business Updates Cleopatra Investor Presentation 1Q21 41
Slide 42: 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 43: 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 44: 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 45: 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 46: 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 47: 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 48: 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 49: 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 50: Governance & Shareholder Information
Governance & Shareholder Information Cleopatra Investor Presentation 1Q21 50
Slide 51: 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 52: 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 53: CLHO Trading Analysis
CLHO Trading Analysis CHG’s Trading Analysis CHG’s Price Performance Since IPO (Rebased to 100) Valuation Multiples 289% % Change in 51% 14.1x Performance 10.8x 12.3x (IPO - Date) EV/EBITDA CHG EGX30 Valuation Multiples (x) CLHO Volume CHG EGX30 Dec 2019 Dec 2020 Feb 2021 600 500 400 300 33.9x 29.8x
Slide 54: Appendix
Appendix Cleopatra Investor Presentation 1Q21 54
Slide 55: Additional Information and Financial Disclosures
Additional Information and Financial Disclosures Cleopatra Investor Presentation 1Q21 55
Slide 56: 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 57: 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 58: 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 59: Balance Sheet and Leverage
Balance Sheet and Leverage Balance Sheet Summary Cashflow Movement EGP 000 Balance Sheet Summary Dec-20 Mar-21 Cash 551 678 Inventory 66 66 Debtors & other Debt balance 514 528 Current Assets 1,131 1,271 Intangible Assets 428 427 Non-Current Assets 1,225 1,404 Total Assets 2,783 3,102 Overdraft & Sh
Slide 60: Cash Conversion Cycle
Cash Conversion Cycle DIO DSO 47 98 91 41 Dec - 20 Mar - 21 Dec - 20 Mar - 21 DPO Cash Conversion Cycle 26 123 106 22 Dec - 20 Mar - 21 Dec - 20 Mar - 21 Cleopatra Investor Presentation 1Q21 60
Slide 61: Consolidated Income Statement
Consolidated Income Statement All figures in EGP mn 1Q2021 1Q2020 % change Revenues 633.2 502.9 26% Cost of sales (392.0) (331.7) 18% Gross profit 241.2 171.2 41% Gross Profit Margin 38% 34% 4 pts General & administrative expenses (93.6) (70.0) 34% Cost of acquisition activities (5.3) 0.0 - Provisio
Slide 62: Consolidated Balance Sheet
Consolidated Balance Sheet All figures in EGP mn 31 December 2020 31 March 2021 Non-current assets Fixed assets 1,205.2 1,220.8 Intangible assets 427.6 427.1 Right of use 18.8 176.2 Payment under investment - 5.7 Investment in associates 1.1 1.4 Total non-current assets 1,652.7 1,831.2 Current asset
Slide 63: Consolidated Cashflow Statement
Consolidated Cashflow Statement All figures in EGP mn 31 March 2020 31 March 2021 Cash flow from operating activities: Profit before tax 116.7 145.5 Adjustments for: Depreciation 20.7 27.0 Amortization of intangible assets - 4.0 Allowance for impairment of current assets 13.0 27.3 Provision 0.6 1.0
Slide 64: Market Overview
Market Overview Cleopatra Investor Presentation 1Q21 64
Slide 65: 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 66: 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 67: 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 68: 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 69: 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 70: 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 1Q21 70
Slide 71: 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 1Q21 Source: MOHP 2010, World Bank Report “A roadmap to achieve social justice in
Slide 72: 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 1Q21 72
Cleopatra Hospitals Group — Q1 2021 Earnings Presentation on 6ix