Spire Healthcare Group Plc · LSE:SPI
Spire Healthcare — FY2021 Earnings Presentation
43 slides from Spire Healthcare's earnings presentation, Mar 3, 2022
Slide 1: FY 21 Results Presentation
FY 21 Results Presentation 3 March 2022
Slide 2: Disclaimer
Disclaimer These materials contain certain forward-looking statements relating to the business of Spire Healthcare Group plc (the “Company”), including with respect to the progress, timing and completion of the Company’s development, the Company’s ability to treat, attract, and retain patients and c
Slide 3: Zoom Webinar rules of engagement
Zoom Webinar rules of engagement All attendee lines are muted The Chat function is disabled Please submit your name and organisation using the Q&A function Angus will moderate the session and unmute your line for you to ask your question Any problems please email Laura.Young@spirehealthcare.com 3
Slide 4: Agenda
Agenda FY 21 Overview Justin Ash, Chief Executive Officer FY 21 Financial Review Harbant Samra, Interim Chief Financial Officer Future, Summary and Outlook Justin Ash, Chief Executive Officer Q&A 4
Slide 5: FY 21 Overview
FY 21 Overview Justin Ash, Chief Executive Officer
Slide 6: Strategy being executed at pace
Strategy being executed at pace First choice for Uncompromising on Improving revenue, NHS key partner private patients patient safety profit and cash Strengthened Delivered record Supported the NHS EBITDA growth quality credentials private growth in crisis despite COVID-19 and delivered restrictions
Slide 7: Record private growth
Record private growth Private Revenue 900 First choice for private patients 800 +14.2% 700 • Strong growth in private volume and revenue 600 • Self pay revenue Q2-Q4 ‘21 up 80.0% vs 2019 473.7 500 • Record self-pay growth supported by first ever TV £m 491.8 400 campaign 300 337.6 • PMI recovery unde
Slide 8: Supported the NHS as key partner
Supported the NHS as key partner NHS key partner • Volume-based contract in Q1 21 >356,000 NHS • Cancer hubs in nine locations patients seen since • New contracts in place with commissioners April 2020 • Holding share of available eRS volumes; focus on orthopaedics 8
Slide 9: Strengthened quality credentials and delivered Purpose
Strengthened quality credentials and delivered Purpose CQC Scores 100% 95% 92% 95% Uncompromising on patient safety 90% 89% 85% 78% 80% 70% • Focus on quality remains 60% • Ten inspections, all rated “Good” 50% 40% • 95% hospitals “Good” or “Outstanding” 30% • £77m CAPEX investment including ten 20%
Slide 10: Patient satisfaction remains strong
Patient satisfaction remains strong Making a positive difference to our patients’ lives through outstanding personalised care 85% agree that our 92% agree that our 94% agree that our care has made a care was care was positive outstanding personalised difference (no change) (no change) (+2pp) Source:
Slide 11: EBITDA growth despite COVID-19 restrictions
EBITDA growth despite COVID-19 restrictions EBITDA and Adjusted EBIT (£m) Improving revenue, profit and cash 200.0 189.0 178.2 180.0 161.1 160.0 • Revenue up 20% 140.0 • EBITDA up 11% 120.0 97.6 100.0 • Significant COVID cost burden of £53m partly 80.0 67.1 81.1 offset by growing efficiency and focu
Slide 12: Thank you!
Thank you! lovking after gy
Slide 13: FY 21 Financial Review
FY 21 Financial Review Harbant Samra, Interim Chief Financial Officer
Slide 14: Financial headlines FY 21: P&L
Financial headlines FY 21: P&L Revenue EBITDA Adjusted EBIT Adjusted Loss £1,106.2m £178.2m £81.1m Before Tax £7.0m (FY 19: £980.8m) (FY 19: £189.0m) (FY 19: £97.6m) (FY 19: £12.8m profit) (FY 20: £919.9m) (FY 20: £161.1m) (FY 20: £67.1m) (FY 20: £18.5m loss) Underlying Margin (excl. COVID costs) 20
Slide 15: Financial headlines FY 21: balance sheet
Financial headlines FY 21: balance sheet Net bank debt Net Debt/EBITDA Capex ratio improved FCF improved £77.1m 2.3x £27.4m £224.9m (FY 19: £62.5m) (FY 19: £51.0m) (FY 20: £50.8m) (FY 19: £330.0m) (FY 19: 3.0x) (FY 20: £34.7m) (FY 20: £314.5m) (FY 20: 3.9x) 15
Slide 16: Spire's weekly relevant enquiries continue to grow
Spire’s weekly relevant enquiries continue to grow 14000 2019 2020 2021 2022 12000 10000 Enquiries 8000 6000 4000 2000 0 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 Week 16
Slide 17: Self-pay performance continues at record levels
Volume 1000 2000 3000 4000 5000 6000 7000 0 04.01.2021 07.01.2021 10.01.2021 13.01.2021 16.01.2021 19.01.2021 22.01.2021 25.01.2021 28.01.2021 31.01.2021 03.02.2021 06.02.2021 09.02.2021 12.02.2021 15.02.2021 18.02.2021 21.02.2021 24.02.2021 27.02.2021 02.03.2021 05.03.2021 08.03.2021 11.03.2021 14.
Slide 18: PMI volume recovering steadily
Volume 1000 2000 3000 4000 5000 6000 7000 0 04.01.2021 07.01.2021 10.01.2021 13.01.2021 16.01.2021 19.01.2021 22.01.2021 25.01.2021 28.01.2021 31.01.2021 03.02.2021 06.02.2021 09.02.2021 12.02.2021 15.02.2021 18.02.2021 21.02.2021 24.02.2021 27.02.2021 02.03.2021 05.03.2021 08.03.2021 11.03.2021 14.
Slide 19: Payor mix: growth in self-pay
Payor mix: growth in self-pay Revenue by payor 2% 2% 2% 3% 100% 90% 30% 23% 80% 46% 43% 70% 60% 50% 45% 40% 50% 68% 37% 74% 30% 37% 20% 29% 10% 18% 15% 18% 0% FY 19 FY 20 Q1 21 Q2-4 21 Self pay PMI NHS Other 19
Slide 20: Maintained higher ARPC – reflects private mix and acuity
Maintained higher ARPC – reflects private mix and acuity FY 19 Avg Qtr Q2 21 Q3 21 Q4 21 PMI Self-pay Total PMI Self-pay Total private PMI Self-pay Total private PMI Self-pay Total private private IPDC admissions 30.4 11.9 42.3 28.6 17.7 46.3 25.9 17.3 43.2 28.2 17.8 46.0 ARPC (£) 2,534 2,884 2,632
Slide 21: EBITDA bridge
EBITDA bridge EBITDA Bridge 250.0 4 200.0 + 189.0 | | 178.2 161.1 150.0 + 100.0 T T T T T T 1 FY 2019 Actuals FY 2020 Actuals _ Private - volumes Private - ARPC NHS volumes Covid Costs FY 2021 Actuals QZ Spire Healthcare a1 Covking after ym
Slide 22: Exposed to other Covid costs – but expected to reduce over time
Exposed to other Covid costs – but expected to reduce over time (cancellation data for Q1 2021 was not relevant as the Group was operating under a different NHS contract) 22
Slide 23: Operational restructure driving cost efficiencies
Operational restructure driving cost efficiencies Implementing efficiency programmes to deliver £15m of savings in 2022 Simplification Digital initiatives Headcount reduction 2 regions & 14 hubs Pre-operative assessment Admin, Central & Pricing Engine Clinical Keep total 2022 YOY staff costs flat, d
Slide 24: Liquidity and balance sheet strength
Liquidity and balance sheet strength Refinancing Net Bank Debt Portfolio Value Repaid £100m of Senior £224.9m (after S&LB) Freehold portfolio Loan Facility and re- and improved net debt/ market value >£1.3bn financed EBITDA from 3.9x to 2.3x (2018 YE: £1.1bn) 24
Slide 25: Outlook and Future
Outlook and Future Justin Ash, Chief Executive Officer
Slide 26: UK Healthcare demand post COVID has fundamentally changed
UK Healthcare demand post COVID has fundamentally changed Latest NHS England Waiting List Modelled Waiting List Scenarios Source: Institute for Fiscal Studies: Could NHS waiting lists really reach 13 million? https://ifs.org.uk/publications/15557 26
Slide 27: Our target customer base has nearly doubled in two years
Our target customer base has nearly doubled in two years Age Profile Income Profile Experience of Private Used PH, high 9.0m 9.0m openness 9.0m 0.5 +67% 1.0 +67% 75+ £100k+ Used PH, lower 2.5 +92% openness 3.8 +81% £60k-£100k 3.3 +120% 55-74 4.8m 4.8m 4.8m £40k-£60k Not used PH, 2.4 +100% 35-54 0.3
Slide 28: FY 22 guidance
FY 22 guidance First choice for Uncompromising on Improving revenue, NHS key partner private patients patient safety profit and cash Increased support Continued EBITDA Further private Maintain strict growth growth for NHS in elective COVID safety recovery measures • £15m efficiencies • Strong self-p
Slide 29: Developing our ESG strategy – initiatives already underway
Developing our ESG strategy – initiatives already underway • Carbon neutral by 2030 – ahead of • Largest nurse apprenticeship many healthcare operators scheme in England • Electricity from renewable sources • FT Diversity Index top 850 - October 2021 • Let’s Talk Networks • Carbon culture and champi
Slide 30: Evolving strategy to meet unprecedented demand
Evolving strategy to meet unprecedented demand Quality focus and uncompromising on patient safety Expand our Maintain focus on proposition to improving returns in provide a more our core hospital integrated healthcare estate offering Capital Markets Day in June 30
Slide 31: FY 21 Results Presentation
FY 21 Results Presentation 3 March 2022
Slide 32: Appendix
S2 Spire Healthcare Appendix Corking after ya
Slide 33: Technical guidance
Technical guidance Technical guidance for 2022 Total rent c.£90m D&A c.£100-105m Capex c.£80-90m Net financing costs c.£87-93m Tax Effective corporate tax rate slightly above the statutory rate of 19% Net bank debt c.£190-230m 33
Slide 34: Financial headlines FY 21: Adjusting items
Financial headlines FY 21: Adjusting items • Adjusting items added to Operating Profit of £5.9m • Total Adjusting items of £5.1m after including a £0.8m charge which is reported against interest • The Adjusting items charge is largely comprised of three items: • £23.5m profit on sale and leaseback o
Slide 35: NHS England contracts negotiated
NHS England contracts negotiated • 1 January 2021 - Volume based transition contract • Payment by activity based on NHS tariff • Minimum value underpin • NHS has right to call surge to access all capacity in areas where COVID infection rates high • Contract until end March 2021 • 10 January 2022 – N
Slide 36: Revenue by payor
Revenue by payor H1 21 H1 20 H1 19 H2 21 H2 20 H2 19 FY 21 FY 20 FY 19 (£m) (£m) (£m) (£m) (£m) (£m) (£m) (£m) (£m) PMI 231.3 145.9 247.0 242.4 191.7 244.8 473.7 337.6 491.8 Self-pay 129.9 47.6 88.6 162.1 88.0 90.2 292.0 135.6 178.8 Total private 361.2 193.5 335.6 404.5 279.7 335.0 765.7 473.2 670.6
Slide 37: Operating cost analysis
Operating cost analysis H1 21 H1 20 H1 19 H2 21 H2 20 H2 19 FY 21 FY 20 FY 19 (£m) (£m) (£m) (£m) (£m) (£m) (£m) (£m) (£m) Clinical staff 126.9 97.1 98.8 133.9 115.6 104.5 260.8 212.6 203.3 Direct costs 132.8 78.9 110.7 130.6 113.9 113.2 263.4 192.8 223.9 Medical fees 44.4 29.1 51.6 46.4 29.6 50.6 9
Slide 38: Cash management – steady trajectory
Cash management – steady trajectory FY 21 (£m) FY 20 (£m) FY 19 (£m) Cash from operating activities 172.4 160.0 184.9 Working capital movement 11.4 (3.9) 17.9 Capex (67.0) (46.3) (60.2) Proceeds from disposal of assets * 88.9 - 11.6 Acquisition cash outflow ** (14.7) - - Financing activities (94.7)
Slide 39: Cash & Borrowings
Cash & Borrowings Dec 21 (£m) Dec 20 (£m) Bank borrowings 427.5 420.8 Cash 202.6 106.3 Net bank debt 224.9 314.5 Dec 21 (£m) Dec 20 (£m) Bank borrowings 427.5 420.8 Lease liabilities (under IFRS 16) 837.8 749.5 Total borrowings 1,265.3 1,170.3 39
Slide 40: NHS volumes below historical levels due to muted commissioning
Volume 04.01.2021 07.01.2021 10.01.2021 13.01.2021 16.01.2021 19.01.2021 22.01.2021 25.01.2021 28.01.2021 31.01.2021 03.02.2021 06.02.2021 09.02.2021 12.02.2021 15.02.2021 18.02.2021 21.02.2021 24.02.2021 27.02.2021 02.03.2021 05.03.2021 08.03.2021 11.03.2021 14.03.2021 17.03.2021 20.03.2021 23.03.2
Slide 41: Target audience consumers are aware of waiting list issues
Target audience consumers are aware of waiting list issues, either through the media or trying to access themselves This growth in consideration of using private hospitals has been driven by issues in accessing NHS services, both experienced and perceived. NHS waiting times continue to worsen and no
Slide 42: Hospital and clinic ratings from CQC, HIW and HIS
Hospital and clinic ratings from CQC, HIW* and HIS† Site Rating Site Rating Site Rating Site Rating Requires Alexandra Edinburgh/Shawfair† Good Liverpool Good St. Anthony's Good Improvement Brighton/Montefiore Outstanding Elland Good London East Good Thames Valley Good Bristol Good Fylde Coast Good
Slide 43: Hip and knee procedures - market share rebounding
Hip and knee procedures - market share rebounding The addressable market is the volume of procedures undertaken either at a Spire hospital, or at a NHS or independent sector hospital that is local enough to be classed in a Spire hospital's competitive set 43
Spire Healthcare Group — FY2021 Earnings Presentation on 6ix