Cleopatra Hospital Company · EGX:CLHO
Cleopatra Hospital — Cleopatra Hospitals Group — Q3 2020 Earnings Presentation
61 slides from Cleopatra Hospital's earnings presentation, 2020
Slide 1: Cleopatra Hospitals Group Investor Presentation 3Q20
Cleopatra Hospitals Group Investor Presentation 3Q20
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: Diversified Service Offering and Revenue Stream
Diversified Service Offering and Revenue Stream In 3Q2020, CHG reported strong top- and bottom-line growth on a quarterly and nine-month basis 77%* 2%* 18%* 3%* New Revenue Streams – 2020 FACILITY OUTPATIENT IVF MANAGEMENT HOSPITALS POLYCLINICS DIAGNOSTICS PHARMACY CHG operates six leading CHG opera
Slide 6: 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 7: Broad Network Coverage in Greater Cairo
Broad Network Coverage in Greater Cairo Throughout the COVID-19 crisis, CHG Management has actively worked to maximize the Group’s referral potential while maximizing utilization across facilities Cleopatra Hospitals Group, is the largest private 9 hospital group in Egypt by number of beds and opera
Slide 8: CHG 3Q2020 Financial Highlights
CHG 3Q2020 Financial Highlights In the third quarter of the year, Cleopatra Hospitals Group witnessed an impressive financial and operational recovery. EGP 151.4 mn EGP 535.9 mn Adjusted EBITDA1 in 3Q20 with a Consolidated revenues in 3Q20 with The Group’s performance was supported by the gradual li
Slide 9: Financial Performance in 3Q2020
Financial Performance in 3Q2020 Consolidated revenues increased 16% y-o-y (+58% q-o-q) in the third quarter of the year to record EGP 535.9 million, on the back of recovering volumes, favourable pricing, and an increasingly optimised service mix. Gross profit for the period expanded 12% y-o-y to EGP
Slide 10: Key Revenue Drivers (i)
Key Revenue Drivers (i) In the three months to 30 September 2020, patient volumes continued to build on the solid performance witnessed in June, expanding 65% versus the second quarter of 2020, with the Group recording some its highest monthly volumes on record during the months of August and Septem
Slide 11: Key Revenue Drivers (ii)
Key Revenue Drivers (ii) Year-on-year revenue growth was seen across all of the Group’s segments with the exception of Outpatient services where the Group has been focusing on referrals and utilization from the outpatient clinics and polyclinics without significant price increases. Strong revenue gr
Slide 12: Group Revenue Trend
Group Revenue Trend The Group’s performance in 3Q2020 shows volume and revenues returning to historical trends. Results for the months of August and September were inline with the Group’s most successful monthly performances on record. Group Revenue Trend Strong growth reaching Q3 30% vs last year p
Slide 13: Group Revenue Trend
Group Revenue Trend The Group’s performance in 3Q2020 shows volume and revenues returning to historical trends. Results for the months of August and September were inline with the Group’s most successful monthly performances on record. Monthly Revenue Trend Short-term decrease in patient volumes ear
Slide 14: 2019 in Review (Cont'd)
2019 in Review (Cont’d) 2019 JAN MAR SEPT DEC Signing of JV with Nahda East Cairo Exclusivity West Cairo University to Queens Hospital CHG Assumes El Bani Suef Hospital Polyclinic Agreement to Polyclinic Establish 189-bed Acquisition Katib Operations Civil Work Kick-off Inauguration Acquire IVF Inau
Slide 15: 2019 in Review
2019 in Review Rate of Return on Capital Revenues Gross Profit Adj EBITDA Strong Return on Capital Scale and Integration Model Operational Efficiencies Sustainable Profitability Metrics 28% 28% CAGR: 35% 35% 23% 23% 23% 19% 1,798 31% 29% 30% 501 33% 626 1,456 514 403 23% 22% 1,127 20% 864 339 259
Slide 16: Expansion Strategy & Updates
Expansion Strategy & Updates Cleopatra Investor Presentation 3Q20 16
Slide 17: 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 18: 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 10 Polyclinic
Slide 19: Polyclinics: Present in East and West Cairo with Further Expansion
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 20: 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 21: 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 22: 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 23: 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 24: 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 25: 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 26: 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 3Q20 26
Slide 27: 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 28: 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 29: 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 30: Recent Business Updates
Recent Business Updates Cleopatra Investor Presentation 3Q20 30
Slide 31: 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 32: 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 33: 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 34: 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 35: 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 36: 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 37: Governance & Shareholder Information
Governance & Shareholder Information Cleopatra Investor Presentation 3Q20 37
Slide 38: 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 39: 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 40: Key Investor Information
Key Investor Information Cleopatra Hospitals Company’s Care Healthcare Limited’s DFI Shareholders Shareholder Structure Care Healthcare DEG, the German Investment and A Development Financial Institution An international financial institution, 38% Limited (Malta) Development Corporation, is a partly
Slide 41: Appendix
Appendix Cleopatra Investor Presentation 3Q20 41
Slide 42: Additional Information and Financial Disclosures
Additional Information and Financial Disclosures Cleopatra Investor Presentation 3Q20 42
Slide 43: 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 44: 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 team Audit Committee Board of Directors that focuses on setting the overall strategy of the Group Internal Audit Chief Executive Off
Slide 45: 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 46: Financial Performance by Hospital
Financial Performance by Hospital Cleopatra Hospital (CHC) Cairo Specialised Hospital (CSH) CAGR: 21% CAGR: 16% 764 374 677 42% 41% 287 493 44% 41% 244 34% 38% 28% 30% 35% 32% 281 318 187 198 87 211 88 69 87 129 98 35 102 32 2017 2018 2019 3Q2019 3Q2020 2017 2018 2019 3Q2019 3Q2020 Revenue Gross
Slide 47: Balance Sheet and Leverage
Balance Sheet and Leverage Balance Sheet Summary Cashflow Movement Balance Sheet Summary Dec-19 Sep-20 Cash 841 410 Inventory 49 56 Debtors & other Debt balance 444 508 Current Assets 1,335 974 Intangible Assets 414 414 Non-Current Assets 919 1,192 Total Assets 2,667 2,580 Overdraft & Short Term Loa
Slide 48: Cash Conversion Cycle
Cash Conversion Cycle DIO DSO DPO Cash Conversion Cycle Cleopatra Investor Presentation 3Q20 48
Slide 49: 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 160 Medical & Renovation Capex: • Investments need to refurbish/enhance Expansion recently added faciliti
Slide 50: Consolidated Income Statement
Consolidated Income Statement All figures in EGP mn 3Q2020 3Q2019 % change 9M2020 9M2019 % change Revenues 535.9 462.0 16% 1,379.0 1,287.1 7% Cost of sales (349.4) (295.0) 18% (925.1) (835.6) 11% Gross profit 186.4 166.6 12% 453.8 451.5 0.5% Gross Profit Margin 35% 36% 33% 35% General & administrati
Slide 51: Consolidated Balance Sheet
Consolidated Balance Sheet All figures in EGP mn 31 December 2019 30 September 2020 Non-current assets Fixed assets 908.5 1,066.4 Intangible assets 413.6 413.6 Right of use 10.2 19.3 Payment under investment - 106.3 Total non-current assets 1,332.4 1,605.7 Current assets Paid under subsidiaries capi
Slide 52: Consolidated Cash Flow Statement
Consolidated Cash Flow Statement All figures in EGP mn 30 September 2020 30 September 2019 Cash flow from operating activities: Profit before tax 251.9 241.7 Adjustments for: Depreciation 61.4 45.8 Allowance for impairment of current assets 45.3 48.4 Provision 0.4 (5.3) Capital gain/loss (0.7) (0.3)
Slide 53: Market Overview
Market Overview Cleopatra Investor Presentation 3Q20 53
Slide 54: 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 55: 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 56: 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 57: 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 58: 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 59: 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 3Q20 59
Slide 60: 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 3Q20 Source: MOHP 2010, World Bank Report “A roadmap to achieve social justice in
Slide 61: 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 3Q20 61
Cleopatra Hospitals Group — Q3 2020 Earnings Presentation on 6ix