Life Healthcare Group Holdings Limited · JSE:LHC
Life Healthcare — FY2021 Earnings Presentation
49 slides from Life Healthcare's earnings presentation, Nov 18, 2021
Slide 1: Audited Group Results for the twelve months ended 30 September 2021
Audited Group Results for the twelve months ended 30 September 2021 1
Slide 2: Overview
Overview Peter Wharton-Hood Group Chief Executive 2
Slide 3: Group Overview: Excellent Operating Performance
GROUP OVERVIEW EXCELLENT OPERATING PERFORMANCE Exceptional Alliance Good performance in EPS from continuing Medical Group (AMG) southern Africa (SA) and discontinued performance operations Revenue1 21% Revenue 10.3% 120.6 cents Normalised EBITDA1,2 41% Normalised EBITDA 12.2% (2020: -6.4 c
Slide 4: Key Objectives for 2021
GROUP OVERVIEW KEY OBJECTIVES FOR 2021 Objectives Progress Operational efficiency ▪ Restore the business to pre-COVID-19 levels ▪ Higher margins across the Group ▪ Cash generated 113% of normalised EBITDA ▪ Deliver high quality outcomes and patient ▪ Quality metrics consistent with prior years High
Slide 5: Continued Progress in Diversifying Revenue and Mix
GROUP OVERVIEW CONTINUED PROGRESS IN DIVERSIFYING REVENUE AND MIX Normalised Acute versus Revenue (%) EBITDA (%) non-acute revenue (%) 27% 28% 28% 29% 23% 23% 26% 24% 30% 36% 33% 35% 73% 72% 72% 71% 77% 77% 74% 76% 70% 64% 67% 65% FY2018 FY2019 FY2020 FY2021 FY2018 FY2019 FY2020 FY2021 FY2018 FY2019
Slide 6: Our Unique Diversified Offering
GROUP OVERVIEW OUR UNIQUE DIVERSIFIED OFFERING Southern Africa International ▪ 66 healthcare facilities ▪ Leading provider of across South Africa and imaging services to Botswana governments across the United Kingdom, Italy and ▪ 8 256 hospital beds Ireland ▪ 602 mental health beds ▪ 147 diagnostic
Slide 7: Our Environmental, Social and Governance Journey
OUR ENVIRONMENTAL, SOCIAL AND GOVERNANCE JOURNEY MAKING LIFE BETTER FOR OUR PATIENTS, OUR PEOPLE AND OUR PLANET Solar installations at 15 hospitals ▪ Reduce grid-tied electricity AAA consumption by c.20% MSCI ESG ▪ Produce enough power for 1 500 rating households (2020: A) ▪ Prevent c.7 900 tons of
Slide 8: Operational Review International
Operational Review International Mark Chapman CEO – International 8
Slide 9: Alliance Medical Group
ALLIANCE MEDICAL GROUP A leading independent provider of imaging services in Europe and the UK Audited Group results for the twelve months ended 30 September 2021 9
Slide 10: AMG: Exceptional Overall Performance
FY2021 | INTERNATIONAL AMG: EXCEPTIONAL OVERALL PERFORMANCE % 2021 2020 change ▪ Underlying revenue and normalised EBITDA growth from: Revenue (GBP’m) 368 304 21.0 ▪ Resilience and growth in PET-CT UK 193 158 21.7 scan volumes in the UK ▪ Strong growth across Ireland Italy 104 88 18.4 ▪ Increasing d
Slide 11: AMG: Overview
FY2021 | INTERNATIONAL AMG: OVERVIEW UK Italy Ireland Other geographies ▪ DI1 static sites 36 Spain Netherlands Germany Finland ▪ PET-CT national ▪ Owned clinics 34 contract sites 38 ▪ Static sites 7 ▪ Operating sites 27 ▪ Mobiles 57 ▪ Cyclotron site 1 Estonia Norway Switzerland Austria ▪ Cyclotron
Slide 12: COVID-19 Update | International
COVID-19 UPDATE | INTERNATIONAL RESILIENT OPERATIONAL PERFORMANCE ▪ AMG continues to see an improvement in demand for its non- COVID-19-related services ▪ Centrally procured COVID-19 scanning solutions for the NHSE1 came to an end on 30 September 2021 but demand remains high with local procurement n
Slide 13: AMG: UK Molecular Imaging
FY2021 | INTERNATIONAL AMG: UK MOLECULAR IMAGING (MI) ▪ PET-CT volumes continued to recover throughout UK Molecular Imaging volumes 2021 with 19% growth year-on-year and H2-2021 volumes 8% higher than H1-2021 ▪ PET-CT wave 1 ▪ MI growth underpinned by 10-year PET-CT wave 1 contract ▪ Pricing certain
Slide 14: AMG: UK Diagnostic Imaging
FY2021 | INTERNATIONAL AMG: UK DIAGNOSTIC IMAGING (DI) ▪ UK DI volumes up 16% year-on-year, including COVID- UK Diagnostic Imaging volumes 19-related contracts ▪ Strategic focus continues to be on long-term partnership solutions with hospital trusts ▪ Over the last 12 months we have been reactive to
Slide 15: AMG: UK Diagnostic Imaging – Continued
FY2021 | INTERNATIONAL AMG: UK DIAGNOSTIC IMAGING – CONTINUED ▪ Waiting lists for diagnostic imaging continue to remain elevated due COVID-19 and present a compelling argument for tendering out these volumes ▪ NHSE looking to create Community Diagnostic Centres across England, with public-private pa
Slide 16: AMG: UK Community Diagnostic Centres
FY2021 | INTERNATIONAL AMG: UK COMMUNITY DIAGNOSTIC CENTRES (CDC) ▪ Investment into a new standalone diagnostic centre in England ▪ CDC will house 2x MRI, 2x CT scanners and 1x PET-CT scanner on day 1, with space for further expansion as demand grows ▪ Long-term contract agreed ▪ Building commencing
Slide 17: AMG: Italy
FY2021 | INTERNATIONAL AMG: ITALY ▪ Revenue up 18.4% as a result of recovery in Italy total imaging volumes volumes supplemented by COVID-19 blood testing and other laboratory activity ▪ 9.1% growth in 2021 from imaging volumes vs 2020 (22.6% including lab activity) ▪ Focus on continuing scanning vo
Slide 18: AMG: Ireland and Other
FY2021 | INTERNATIONAL AMG: IRELAND AND OTHER ▪ Record volumes seen in Ireland through FY2021, Ireland imaging volumes Radio-pharmacy doses up 34.4% vs the prior year across diagnostic 15% imaging 204 472 ▪ Strong demand in Irish private self-pay marketplace during FY2021 as patients look to bypass
Slide 19: Continued Focus on Quality Outcomes and Patient Experience
QUALITY | INTERNATIONAL CONTINUED FOCUS ON QUALITY OUTCOMES AND PATIENT EXPERIENCE Year-on-year Clinical quality indicator FY2021 FY2020 FY2019 Target trend UK Patient experience (satisfied and very satisfied) 96.7% 97.3% 95.3% >90.0% Friends and family score 95.7% 95.7% 94.9% ➔ >90.0% Written pat
Slide 20: Operational Review Southern Africa
Operational Review Southern Africa Adam Pyle CEO – southern Africa
Slide 21: COVID-19 Update | Southern Africa
COVID-19 UPDATE | SOUTHERN AFRICA Our COVID-19 PPDs1 across major SA provinces Non-COVID-19 PPDs and COVID-19 PPDs 3 000 2 500 2 000 Total COVID-19 PPDs Other 1 500 KZN Eastern Cape Western Cape 1 000 Gauteng 500 0 01-Dec-20 01-Jun-20 01-Jun-21 01-Feb-20 01-Apr-20 01-May-20 01-Nov-20 01-Apr-21 01-Ma
Slide 22: Southern Africa Business Overview
FY2021 | SOUTHERN AFRICA BUSINESS OVERVIEW: SEQUENTIAL IMPROVEMENT IN NUMBERS Overview Revenue (R’m) ▪ Acute hospital business has shown a solid recovery 1 456 ▪ Learnings from prior COVID-19 waves and a rebound in 1 259 1 164 Four-year 1 122 1 061 1 346 elective surgical cases between waves has ben
Slide 23: Southern Africa Business Overview: Revenue and EBITDA Margin
FY2021 | SOUTHERN AFRICA BUSINESS OVERVIEW: SEQUENTIAL IMPROVEMENT IN NUMBERS SA revenue progression (R’m) SA normalised EBITDA margin progression 25% 23.8% 720 657 20% 598 EBITDA margin (%) 736 565 566 17.6% 689 17.1% 16.8% 16.6% 513 15% 10% 8 180 8 618 7 785 8.5% 6 641 5% 0% H1-2020 H2-2020 H1-202
Slide 24: Segmental Breakdown
FY2021 | SOUTHERN AFRICA SEGMENTAL BREAKDOWN % ▪ Revenue +10.3% with normalised 2021 2020 change EBITDA +12.2% with pleasing PPD growth 0.2% (15.7%) operating leverage seen in H2-2021 Revenue (R’m) 19 023 17 245 10.3 ▪ +9.8% growth in acute hospital Acute hospitals and complementary (R’m) 17 567 15
Slide 25: Acute Hospitals: Overview
FY2021 | SOUTHERN AFRICA Acute hospital PPDs Theatre minutes ACUTE HOSPITALS: OVERVIEW +0% -4% ▪ Continued improvement in PPDs during H2-2021 versus H1- 2021 after weaker H2-2020. Overall PPDs still lower than pre- +5% COVID-19 levels seen in 2019 -26% +15% -29% +16% +1% ▪ Theatre minutes still impa
Slide 26: Complementary Services: Overview
FY2021 | SOUTHERN AFRICA COMPLEMENTARY SERVICES: OVERVIEW Mental health PPDs Acute rehabilitation PPDs +1% -4% ▪ Mental health flat year-on-year but half-year numbers are +18% +8% improving -30% -16% +2% +6% ▪ Acute rehabilitation has seen activity returning slowly but is down 4% year-on-year ▪ Rena
Slide 27: Healthcare Services: Overview
FY2021 | SOUTHERN AFRICA HEALTHCARE SERVICES: OVERVIEW Revenue (R‘m) Normalised EBITDA (R‘m) Life Esidimeni and margin ▪ Stable performance in terms of activities, revenue and 1 500 margins despite the COVID-19 waves +8% 300 13.4% 1 456 ▪ c1 050 000 PPDs during the current period +2% year-on-year 1
Slide 28: Quality | Southern Africa
QUALITY | SOUTHERN AFRICA CONTINUED FOCUS ON QUALITY OUTCOMES AND PATIENT EXPERIENCE Patient Adverse Event Employee Safety Rate Measures ▪ Good overall quality performance in COVID-19 context 2.8 4.5 ▪ General trend shows improvement on prior years ▪ Patient experience on par with prior years 2.6 4.
Slide 29: Growth Initiatives
Growth Initiatives Peter Wharton-Hood Group Chief Executive 29
Slide 30: Life Molecular Imaging: NeuraCeq Globally Approved
GROWTH INITIATIVES | LIFE MOLECULAR IMAGING (LMI) NeuraCeq® GLOBALLY APPROVED ▪ Is an approved amyloid imaging tracer – used in PET-CT scans to help diagnose Alzheimer’s disease ® ▪ Biogen’s Aduhelm® (aducanumab), a drug which may slow the effects of Alzheimer’s disease, received FDA approval on 7 J
Slide 31: NeuraCeq sites and global footprint
GROWTH INITIATIVES | LIFE MOLECULAR IMAGING (LMI) NeuraCeq® sites – we are well positioned to grow based on existing global footprint Audited Group results for the twelve months ended 30 September 2021 31
Slide 32: LMI's Exciting Product Pipeline
GROWTH INITIATIVES | LMI’S EXCITING PRODUCT PIPELINE PRODUCTS IN DEVELOPMENT other pathologies, with long shelf- Product Biomarker Targeted disease Development stage Market opportunity* Alzheimer’s, PSP, Parkinson’s and Next-generation radio tracers for ® Amyloid deposits Alzheimer’s Marketed >€300m
Slide 33: Growth Initiatives | Southern Africa
GROWTH INITIATIVES | SOUTHERN AFRICA SA imaging Strategic objectives ▪ We have made good progress in acquiring imaging businesses 1. Stabilise existing operations ▪ Entered into co-operation and partnering discussions with 2. Expand existing business lines and introduce new lines of practices regard
Slide 34: Financial Review
Financial Review Pieter van der Westhuizen Group CFO
Slide 35: Results Summary
FY2021 | RESULTS SUMMARY Reported revenue Cash generated from NEPS from continuing 12.7% to R26.9 billion operations operations 24.7% 88.3% Reported normalised EBITDA to R5.7 billion 21.6% to R5.1 billion to 109.8 cps Strong financial position Net debt / Disposal of Scanmed2 net normalised E
Slide 36: Financial Statutory Results
FY2021 | FINANCIAL STATUTORY RESULTS 2021 2020¹ % GROUP R’m R’m change Continuing operations ▪ Strong revenue growth due to Revenue 26 885 23 851 12.7 exceptional AMG growth (18.9% in ZAR) as scan volumes recovered and Normalised EBITDA 5 051 4 155 21.6 COVID-19 support contracts provided Normalised
Slide 37: Earnings Per Share
FY2021 | EARNINGS PER SHARE GROUP 2021 2020 % change Weighted average number of shares (million) 1 454 1 455 (0.1) EPS from continuing and discontinued operations (cents) 120.6 (6.4) n/a HEPS from continuing and discontinued operations (cents) 111.1 48.7 128.1 NEPS from continuing and discontinued o
Slide 38: Segmental Financial Results
FY2021 | SEGMENTAL FINANCIAL RESULTS CONTINUING OPERATIONS 3 000 30% Constant 2021 2020 currency (%) R’m R’m % 25% Normalised EBITDA margin (%) Normalised EBITDA (Rm) Revenue 13.4 26 885 23 851 12.7 2 000 20% Southern Africa 10.3 19 023 17 245 10.3 15% International 21.1 7 474 6 286 18.9 1 000 10% G
Slide 39: Consolidated Condensed Statement of Financial Position
FY2021 | CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION GROUP 2021 2020 R’m R’m Non-current assets 33 367 35 328 ▪ Strong financial position Property, plant and equipment 14 695 15 361 Goodwill 13 221 14 315 ▪ Available undrawn facilities Intangible assets 3 162 3 923 of R6.6 billion at 30 S
Slide 40: Cash Flow
FY2021 | CASH FLOW GROUP 2021 2020 % R’m R’m change Cash generated from operations 5 687 4 562 24.7 R’m Transaction costs paid (35) (17) 8 000 120% 113% 7 500 110% Net interest paid (541) (730) 103% 7 000 99% 100% Tax paid (714) (597) 93% 93% 6 500 Maintenance capex (1 542) (1 205) 6 000 80% Minorit
Slide 41: Debt Breakdown
FY2021 | DEBT BREAKDOWN 2021 2021 2021 2020 FY2020 2020 Local currency Weighted avg. Local currency Weighted avg. Funding ’m R’m cost of debt % ‘m R’m cost of debt % (post-tax) (post-tax) Acquisition funding ZAR 500 500 4.26 500 500 4.41 PLN - - - 93 407 2.26 GBP 118 2 411 1.80 139 3 037 1.80 Capex
Slide 42: Debt Repayment Profile
FY2021 | DEBT REPAYMENT PROFILE Balance at Maturing in Maturing in Maturing in Maturing in Maturing in R’m 30 Sep 2021 2022 2023 2024 2025 2026 or later Bank Debt 10 163 (1 384) (3 556) (1 563) (3 340) (320) Lease liabilities 2 562 (427) (675) (239) (242) (979) Total debt 12 725 (1 811) (4 231) (1 8
Slide 43: Dividend
FY2021 | DIVIDEND • The Group’s dividend policy has been updated as follows: Dividends will be paid after taking into account the underlying earnings, cash generation and available funding of the Group, while retaining sufficient capital to fund ongoing operations and growth projects while maintaini
Slide 44: Outlook
Outlook Peter Wharton-Hood Group Chief Executive 44
Slide 45: Audited Group results for the twelve months ended 30 September 2021
Audited Group results for the twelve months ended 30 September 2021 45
Slide 46: Strategic Pillars and Enablers
STRATEGIC PILLARS AND ENABLERS QUALITY EFFICIENCY SUSTAINABILITY GROWTH Deliver cost-effective Effectively Continue Deliver care through our PILLARS engage with our to grow market-leading employees, stakeholders our businesses, quality care clinicians, efficient to ensure our while and processes, lo
Slide 47: Vaccination Update
FY2021 | VACCINATION UPDATE International Population who are fully vaccinated (%) ▪ UK and Europe making good progress with vaccinating the bulk of 70 United Kingdom their populations 60 ▪ c.90% of all AMG healthcare workers have received their first vaccine 50 United States 40 European Union Southe
Slide 48: FY2022 Outlook
FY2022 | OUTLOOK ▪ More normalised operating environment due to progress in vaccination efforts ▪ Continued growth in underlying scan volumes across UK, Ireland and Europe in 2022 International ▪ Invest in LMI operational capability to drive NeuraCeq® sales and manufacturing ▪ Invest in CDC opportun
Slide 49: Questions
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