Slide 1: Growth Initiatives and Capital Raising
GROWTH INITIATIVES AND CAPITAL RAISING 20 AUGUST 2018 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 2: Important Notice and Disclaimer
IMPORTANT NOTICE AND DISCLAIMER The following notice and disclaimer applies to this investor presentation (Presentation) and you are therefore advised to read this carefully before reading or making any other use of this Presentation or any information contained in this Presentation. By accepting th
Slide 3: Important Notice and Disclaimer (Cont'd)
IMPORTANT NOTICE AND DISCLAIMER (CONT'D) Not investment advice This Presentation does not constitute investment or financial product advice (nor tax, accounting or legal advice) or any recommendation by Primary or its advisers to acquire entitlements or New Shares and does not and will not form any
Slide 4: Important Notice and Disclaimer (Cont'd)
IMPORTANT NOTICE AND DISCLAIMER (CONT'D) Financial data (cont'd) This Presentation also contains certain pro-forma financial information in relation to the target of a potential acquisition, as set out on slides 6 and 19, which has been prepared on the basis of unaudited information provided by the
Slide 5: Important Notice and Disclaimer (Cont'd)
IMPORTANT NOTICE AND DISCLAIMER (CONT'D) Disclaimer (cont'd) To the maximum extent permitted by law, Primary, the underwriters and their respective advisers, affiliates, related bodies corporate, directors, officers, partners, employees and agents make no representation or warranty, express or impli
Slide 6: Key Highlights
KEY HIGHLIGHTS » Primary Health Care ("Primary") today announces a number of new and accelerated initiatives in order to best meet the continued demand for high quality community health services – Over the next 3 years, Primary plans to invest ~$140 million to increase operational capacity in existi
Slide 7: Primary Today
PRIMARY TODAY Fundamentals are strong Significant opportunities to invest and grow Primary's business Primary plays a critical role in caring for Australia's population » Delivery of additional and improved services and facilities to meet the needs of referrers and patients Primary operates scale
Slide 8: Strategic Growth Initiatives
STRATEGIC GROWTH INITIATIVES Initiative Overview Cash cost1 Benefits » Increase operational capacity, ~$140 million deliver additional services and Targeting an average of $1 million of EBIT across all 73 centres MEDICAL enhance GP recruitment and CENTRE retention outcomes 1 INVESTMENT Greater t
Slide 9: Strategic Investments and Growth Initiatives
STRATEGIC INVESTMENTS AND GROWTH INITIATIVES 9 GROWTH INITIATIVES AND CAPITAL RAISING NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 10: Outcomes from Strategic Initiatives
OUTCOMES FROM STRATEGIC INITIATIVES » Target an increase of 10-15% in average gross billings per hour by FY 2021 Significant platform improvements expected to drive enhanced Medical Centre performance » Hybrid appointment / walk-in model across all centres » Improved recruitment and retention outc
Slide 11: Medical Centres: People
MEDICAL CENTRES: PEOPLE Enhanced recruitment and retention of high quality health care professionals Initiatives Target GP numbers (FTE1) » Primary is implementing a multi- channel personnel strategy aimed » Regional recruitment: bespoke centre Targeting ~45% at: level strategies leveraging both loc
Slide 12: Medical Centres: Process Improvement
MEDICAL CENTRES: PROCESS IMPROVEMENT Primary is investing in a digital operating platform to drive operating efficiencies, higher GP billings and an improved patient and GP experience Key benefits Average gross billings per hour uplift »1 Introduction of online +$7.60 appointments Increased consul
Slide 13: Medical Centres: Property Improvement
MEDICAL CENTRES: PROPERTY IMPROVEMENT Coordinated program to modernise, improve and extend 52 Medical Centres over the next 3 years Key benefits 52 Medical Centres modernised » Primary has undertaken a and extended1 strategic review of all Medical Centres and their catchment Modern facilities with
Slide 14: Medical Centres: Property Improvement
MEDICAL CENTRES: PROPERTY IMPROVEMENT 10 Urgent Care 64 Centre Uplifts Facilities + 11 Minor Surgery Theatres » Phased approach 35 Procedure to investment Rooms strategy » Initial priority to invest in centres where there is identified excess patient demand and strong ability 97 Consulting to recrui
Slide 15: New Laboratory Information System (LIS)
NEW LABORATORY INFORMATION SYSTEM ("LIS") Current platform is outdated and increasingly difficult New LIS is expected to deliver superior and and expensive to support differentiated capabilities » 25 year old ULTRA system with 4 state-based versions Single, integrated information system used by hi
Slide 16: New LIS Will Drive Significant Benefits
NEW LIS WILL DRIVE SIGNIFICANT BENEFITS » Enhances ability to attract and retain high quality pathologists REFERRER / CLINICAL » Improved pre-analytical accuracy BENEFITS » Ability to deliver advanced genomics and personalised testing » Standardisation of work flows and no duplication between stat
Slide 17: Execution of LIS Implementation
EXECUTION OF LIS IMPLEMENTATION Primary will undertake a staged deployment of LIS, with a dedicated team engaged to execute the implementation strategy Indicative 2018 2019 2020 2021 2022 Benefits schedule » Automated receipt of referral, specimen labelling, patient identification Release 1 and test
Slide 18: Potential Acquisition
POTENTIAL ACQUISITION 18 GROWTH INITIATIVES AND CAPITAL RAISING NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 19: Summary of Potential Acquisition
SUMMARY OF POTENTIAL ACQUISITION Primary is in exclusive negotiations to acquire a leading day hospital operator » Leading operator of day hospitals across a number of states » FY 2018 pro forma EBITDA of $7 million1 OVERVIEW OF TARGET » Material growth in revenue and EBITDA expected over the next 2
Slide 20: Acquisition Rationale
ACQUISITION RATIONALE Day hospital businesses are well positioned for future growth and further investment Higher growth in same-day separations – Shift towards more day procedures, driven by improving surgical technology as well as superior outcomes for patients and payers – The number of private
Slide 21: Financial Impact
FINANCIAL IMPACT 21 GROWTH INITIATIVES AND CAPITAL RAISING NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 22: Financial Impact
FINANCIAL IMPACT » The Offer will strengthen the balance sheet to fund strategic Key metrics; $m Jun-181 Adj.2 Jun-18PF growth initiatives, including: Net Debt3 776.8 (244.0) 532.8 – Medical Centre investment program – Pathology investment program Underlying EBITDA4 282.2 - 282.2 – Potential acquisi
Slide 23: FY 2019 Forecast
FY 2019 FORECAST » Primary currently expects underlying NPAT in FY 2019 to be at or above FY 2018 underlying NPAT, prior to the impact of the capital raising and potential acquisition » Based on current trading activity, industry growth is expected to be slower in 1H 2019 and then normalise to long-
Slide 24: Capital Raising
CAPITAL RAISING 24 GROWTH INITIATIVES AND CAPITAL RAISING NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 25: Entitlement Offer Overview
ENTITLEMENT OFFER OVERVIEW » 1 for 5.21 pro rata accelerated non-renounceable entitlement offer to raise $250 million Offer structure and size » Approximately 100 million New Shares issued (~16.1% of post Offer issued Capital) » Comprises Institutional Entitlement Offer and Retail Entitlement Offer
Slide 26: Entitlement Offer Timetable
ENTITLEMENT OFFER TIMETABLE1 Event Date (2018)2 Trading halt and announcement of Entitlement Offer Monday, 20 August Institutional Entitlement Offer and Institutional Bookbuild opens Monday, 20 August Institutional Entitlement Offer and Institutional Bookbuild closes Tuesday, 21 August Trading halt
Slide 27: Additional Information
ADDITIONAL INFORMATION 27 GROWTH INITIATIVES AND CAPITAL RAISING NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 28: Historical and Pro Forma Historical Balance Sheet
HISTORICAL AND PRO FORMA HISTORICAL BALANCE SHEET Primary Historical Adj. for Entitlement Primary Pro forma A$ million (30 June 2018)1 Offer2 Historical (30 June 2018) Cash 84.0 — 84.0 Receivables 150.4 — 150.4 Other assets 95.2 1.8 97.0 Property, plant & equipment 297.5 — 297.5 Goodwill and intangi
Slide 29: Glossary of Terms
GLOSSARY OF TERMS Term Definition ACC Approved Collection Centre AGM Annual General Meeting EBIT Earnings before interest and tax EBITDA Earnings before interest, tax, depreciation and amortisation FTE Full Time Equivalent FY 2018 Financial year ended 30 June 2018 GP General Practitioner HCP Health
Slide 30: Key Risks
KEY RISKS 1. RISK FACTORS The future performance of Primary and the future investment performance of shares in Primary (“Shares”) may be influenced by a range of risk factors, many of which are outside the control of Primary and its directors. A non-exhaustive list of key risks, including those spec
Slide 31: Key Risks (Cont'd)
KEY RISKS (CONT'D) 1.1 RISKS ASSOCIATED WITH PRIMARY’S OPERATIONS (CONT'D) Changes in regulatory policies relevant to pathology, diagnostic imaging and medical centres There are a number of Federal and State policies and regulations that, if changed, may have a material adverse impact on the financi
Slide 32: Key Risks (Cont'd)
KEY RISKS (CONT'D) 1.1 RISKS ASSOCIATED WITH PRIMARY’S OPERATIONS (CONT'D) Licences and accreditation (cont'd) Changes to government regulation or policy for licensing of private hospitals and day procedure centres could have the effect of reducing the barriers to entry and exposing Primary to incre
Slide 33: Key Risks (Cont'd)
KEY RISKS (CONT'D) 1.1 RISKS ASSOCIATED WITH PRIMARY’S OPERATIONS (CONT'D) Dependence upon referrers Primary is heavily reliant upon doctors, whether or not they have a relationship with Primary, continuing to choose a pathology service provider who is affiliated with Primary or a diagnostic imaging
Slide 34: Key Risks (Cont'd)
KEY RISKS (CONT'D) 1.1 RISKS ASSOCIATED WITH PRIMARY’S OPERATIONS (CONT'D) Primary’s business strategies and transformation projects may not be successful (cont'd) In undertaking this significant transformation program to position itself for future growth and sustainability, there is a risk that sig
Slide 35: Key Risks (Cont'd)
KEY RISKS (CONT'D) 1.1 RISKS ASSOCIATED WITH PRIMARY’S OPERATIONS (CONT'D) Medical indemnity claims and costs (cont'd) However, despite these contractual arrangements, healthcare companies are exposed to the risk of medical indemnity or like claims and litigation. Primary is also directly exposed to
Slide 36: Key Risks (Cont'd)
KEY RISKS (CONT'D) 1.1 RISKS ASSOCIATED WITH PRIMARY’S OPERATIONS (CONT'D) Competition risks Primary operates in markets with established competitors and faces competitive pressures. There is a risk that the actions of Primary’s current or future competitors will negatively affect Primary’s ability
Slide 37: Key Risks (Cont'd)
KEY RISKS (CONT'D) 1.1 RISKS ASSOCIATED WITH PRIMARY’S OPERATIONS (CONT'D) Loss or misuse of personal information Primary's operations rely on the secure processing, transmission and storage of confidential, proprietary and other information in its computer systems and networks. Primary's facilities
Slide 38: Key Risks (Cont'd)
KEY RISKS (CONT'D) 1.1 RISKS ASSOCIATED WITH PRIMARY’S OPERATIONS (CONT'D) Industrial relations and wage pressure Many of Primary’s employees are covered by modern awards, enterprise bargaining agreements and other workplace agreements, which periodically require classification assessment, or renego
Slide 39: Key Risks (Cont'd)
KEY RISKS (CONT'D) 1.1 RISKS ASSOCIATED WITH PRIMARY’S OPERATIONS (CONT'D) Inability to access capital markets or refinance debt on attractive terms Primary may require funding or working capital in the future in order to fund its operations. Given the nature of Primary’s revenue profile and the pot
Slide 40: Key Risks (Cont'd)
KEY RISKS (CONT'D) 1.2 GENERAL RISKS (CONT'D) Dilution Your percentage shareholding in Primary will be diluted if you do not participate to the full extent in the Entitlement Offer and you will not be exposed to future increases or decreases in Primary’s share price in respect of the New Shares whic
Slide 41: Key Risks (Cont'd)
KEY RISKS (CONT'D) 1.2 GENERAL RISKS (CONT'D) Underwriting risk (cont'd) » * a change in other senior management or the directors of Primary occurs; or » ASIC issues or gives notice of an intention to issue proceedings or commences any inquiry or investigation in relation to the Offer; or » * Primar
Slide 42: Key Risks (Cont'd)
KEY RISKS (CONT'D) 1.2 GENERAL RISKS (CONT'D) Tax changes Any change to the taxation of shares (including the taxation of dividends) and the taxation of companies (including the existing rate of company income tax) may adversely impact on Primary shareholder returns, as may a change to the tax payab
Slide 43: Foreign Selling Restrictions
FOREIGN SELLING RESTRICTIONS This Presentation does not constitute an offer of New Shares of Primary in any jurisdiction in which it would be unlawful. In particular, this Presentation may not be distributed to any person, and the New Shares may not be offered or sold, in any country outside Austral
Slide 44: Foreign Selling Restrictions (Cont'd)
FOREIGN SELLING RESTRICTIONS (CONT'D) Canada (British Columbia, Ontario and Quebec provinces) (cont'd) Statutory rights of action for damages and rescission Securities legislation in certain of the Provinces may provide purchasers with, in addition to any other rights they may have at law, rights of
Slide 45: Foreign Selling Restrictions (Cont'd)
FOREIGN SELLING RESTRICTIONS (CONT'D) Canada (British Columbia, Ontario and Quebec provinces) (cont'd) Language of documents in Canada. Upon receipt of this Presentation, each investor in Canada hereby confirms that it has expressly requested that all documents evidencing or relating in any way to t
Slide 46: Foreign Selling Restrictions (Cont'd)
FOREIGN SELLING RESTRICTIONS (CONT'D) France This Presentation is not being distributed in the context of a public offering of financial securities (offre au public de titres financiers) in France within the meaning of Article L.411-1 of the French Monetary and Financial Code (Code monétaire et fina
Slide 47: Foreign Selling Restrictions (Cont'd)
FOREIGN SELLING RESTRICTIONS (CONT'D) Ireland The information in this Presentation does not constitute a prospectus under any Irish laws or regulations and this Presentation has not been filed with or approved by any Irish regulatory authority as the information has not been prepared in the context
Slide 48: Foreign Selling Restrictions (Cont'd)
FOREIGN SELLING RESTRICTIONS (CONT'D) New Zealand This Presentation has not been registered, filed with or approved by any New Zealand regulatory authority under the Financial Markets Conduct Act 2013 (the "FMC Act"). The New Shares are not being offered to the public within New Zealand other than t
Slide 49: Foreign Selling Restrictions (Cont'd)
FOREIGN SELLING RESTRICTIONS (CONT'D) Singapore (cont'd) This Presentation has been given to you on the basis that you are (i) an existing holder of Primary’s shares, (ii) an "institutional investor" (as defined in the SFA) or (iii) a "relevant person" (as defined in section 275(2) of the SFA). In t
Slide 50: Foreign Selling Restrictions (Cont'd)
FOREIGN SELLING RESTRICTIONS (CONT'D) United Kingdom Neither this Presentation nor any other document relating to the offer has been delivered for approval to the Financial Conduct Authority in the United Kingdom and no prospectus (within the meaning of section 85 of the Financial Services and Marke