Ramsay Health Care Limited · ASX:RHC
Ramsay Health Care — Macquarie Capital Securities Australia Conference 2008
27 slides from Ramsay Health Care's conference presentation, May 9, 2008
Slide 1: Macquarie Capital Securities Australia Conference
For personal use only Macquarie Capital Securities Australia Conference 9 May 2008 Christopher Rex, Chief Operating Officer 1
Slide 2: Agenda
For personal use only AGENDA • Ramsay transformation • Operating in a growth industry • Strong growth strategy • Half year results overview • Committed debt funding/currency exposure • Offshore expansion ¾ Why the UK, competitive dynamics, Ramsay UK profile, Adare Hospital & Clinic in Ireland, NHS a
Slide 3: Remarkable Transformation: At Listing vs Today
REMARKABLE TRANSFORMATION For personal use only AT LISTING TODAY (Sept 1997) More than 100 hospitals and facilities 11 hospitals • 65 in Australia • 3 in Indonesia • 34 in the UK 1,351 beds More than 8,000 beds •7,067 in Australia and Indonesia •1,071 in the UK 2,000 staff More than 24,600 staff Ann
Slide 4: Operating in a Growth Industry
OPERATING IN A GROWTH INDUSTRY For personal use only • Strong industry fundamentals underpin Ramsay’s growth • Ageing population due to “baby boomers” and increasing life expectancy • Balanced health care system to be continued by Labor Government ¾ 30% rebate to continue ¾ Average premium rise of 4
Slide 5: Operating in a Growth Industry (health funds)
OPERATING IN A GROWTH For personal use only INDUSTRY • Health fund membership at historic highs and growing with better risk profile • Health funds in excellent shape, hence insurers have capacity to pay hospital operators like Ramsay competitive reimbursement rates 5
Slide 6: A Growth Company
For personal use only A GROWTH COMPANY • Ramsay is a well managed company ¾ Focused on micro management ¾ Special culture – the “Ramsay Way” ¾ Long-term, stable senior management team ¾ A financially disciplined growth strategy, best industry margins and KPIs • Ramsay owns and operates an excellent
Slide 7: Strong Growth Strategy
For personal use only STRONG GROWTH STRATEGY • Organic growth ¾Seeking to optimise growth at existing hospitals ¾Micro management ¾Strategy to manage veterans’ hospitals transition • Investing in existing business ¾Improving quality of our facilities and acuity of our hospitals ¾Brownfield expansion
Slide 8: Growth Strategy Delivering Strong Returns
GROWTH STRATEGY DELIVERING STRONG RETURNS For personal use only Ramsay Total Shareholder Return 650% 600% 584% 550% 500% 450% 400% 350% 300% 250% 200% 194% 150% 123% 100% 50% 0% (50)% 01-May-01 01-May-02 01-May-03 01-May-04 01-May-05 01-May-06 01-May-07 30-Apr-08 Ramsay ASX 200 Accumulation Index AS
Slide 9: Growth Strategy Delivering Strong Returns (since Jan 2007)
GROWTH STRATEGY DELIVERING STRONG RETURNS For personal use only 30% Total Shareholder Return 20% % Change 10% 9% 4% 0% -4% (10)% (20)% 01-Jan-07 01-May-07 01-Sep-07 01-Jan-08 30-Apr-08 Ramsay ASX 200 Accumulation Index ASX 200 Healthcare Peers Accumulation Index (HSP, SHL, PRY) 1 Jan 2007 30 Apr 200
Slide 10: Half Year Overview (Pre Ramsay UK)
HALF YEAR OVERVIEW (PRE RAMSAY UK) For personal use only • Strong half-year result on like-for-like basis ¾Strong organic growth across the portfolio ¾Veterans’ hospitals improving: Greenslopes turnaround started, Hollywood still being stabilised ¾Brownfields expansion program progressing well, cont
Slide 11: Financial Performance (Pre Ramsay UK)
FINANCIAL PERFORMANCE (PRE RAMSAY UK) For personal use only Half Year ended 31 December 2007 2006 $m $m % Inc. Continuing Operations Operating Revenue 1,128.9 1,055.2 7.0% EBITDA 153.5 138.5 10.8% EBIT 120.4 108.5 11.0% Core NPAT – continuing operations 63.6 56.2 13.2% Core EPS – continuing operatio
Slide 12: Group Financial Performance (Including Ramsay UK)
GROUP FINANCIAL PERFORMANCE (INCLUDING RAMSAY UK) For personal use only Half Year ended 31 December 2007 2006 $m $m % Inc. Continuing Operations (including Ramsay UK) Operating Revenue 1,188.1 1,055.2 12.6% EBITDA 156.6 138.5 13.0% EBIT 120.1 108.5 10.7% Core NPAT – continuing operations 61.2 56.2 9
Slide 13: EBITDA Growth & Positive Margin Trends (Pre Ramsay UK)
EBITDA GROWTH & POSITIVE MARGIN TRENDS (PRE RAMSAY UK) For personal use only • Group EBITDA up 10.8% for the half year • Group EBITDA margin 13.6% vs 13.1% • Hospital EBITDA margin 17.9% vs 17.7% excl. prosthesis • Hospital EBIT margin 14.7% vs 14.5% excl. prosthesis 13
Slide 14: Committed Debt Funding
COMMITTED DEBT FUNDING For personal use only • In November 2007 Ramsay refinanced its senior debt facility to accommodate the Capio UK acquisition and to provide future growth funds • Ramsay has committed senior debt funding until November 2012 and is therefore not exposed to any refinancing risk fo
Slide 15: Managing Interest Rate & Currency Exposures
MANAGING INTEREST RATE & For personal use only CURRENCY EXPOSURES Ramsay is conservative in relation to the management of interest rate & currency risk exposures • Interest Rates ¾ Interest rate exposure on approx. 75% of current drawn debt is hedged for periods of 2-5 years • Currency ¾ Natural hed
Slide 16: Rationale for Offshore Expansion
RATIONALE FOR For personal use only OFFSHORE EXPANSION • Competition constraints means it is difficult for Ramsay to make significant hospital acquisitions in Australia • Ramsay can be successful offshore with the following formula: ¾ Ability to run our business on relatively low revenue base ¾ Abil
Slide 17: Why the UK?
For personal use only WHY THE UK? • Significant change in environment • Strong growth potential ¾ Outsourcing of National Health Service to private sector presents significant upside ¾ Government is strongly committed to NHS reform agenda • Private Medical Insurance (PMI) ¾ Stable market • Similar c
Slide 18: UK Competitive Dynamics
For personal use only UK COMPETITIVE DYNAMICS • UK private acute care is dominated by five key operators • Major Ramsay UK marketing campaign underway to win bigger share of NHS market Main Competitors according to Bed Numbers (Source: Healthcare Market News by Lang & Buisson - May 08) GHG (Netcare)
Slide 19: Ramsay UK Profile
For personal use only RAMSAY UK PROFILE • 4th largest operator of private hospitals in the UK (approx A$700M in annual revenues) • Diverse business and revenue source ¾ 23 private hospitals across England with 895 beds and 50 operating theatres ¾ 9 Independent Sector Treatment Centres (ISTCs) ¾ 2 ne
Slide 20: Adare Hospital & Clinic
For personal use only ADARE HOSPITAL & CLINIC • Ramsay signed an agreement last month to manage the new €139.2 million Adare Hospital & Clinic in Ireland • Demonstrates Ramsay’s confidence in this market ¾ 72 beds ¾ Construction to begin in coming months, scheduled to open in early 2010 ¾ Will be fu
Slide 21: NHS Activity Rising
NHS ACTIVITY RISING For personal use only • Strong rise in NHS activity January-March 2008 ¾ Significant growth in acute hospital activity over prior year and above budget ¾ Growth entirely due to NHS, coming from both Choose & Book and spot contracts ¾ Referrals to ISTCs continue to grow. Ramsay UK
Slide 22: Patient Choice
PATIENT CHOICE For personal use only • Patient Choice designed to give patients and GPs a choice of provider, starting at first outpatient appointment • Full roll out of free patient choice/Extended Choice Network commenced in April 2008 (following more limited form of scheme underway since 2005) •
Slide 23: Patient Choice
PATIENT CHOICE For personal use only • Department of Health is actively promoting Patient Choice • Hospitals (NHS & private) now able to advertise & UK Government has launched national advertising campaign regarding free choice • New website NHS Choices designed to help patients choose a hospital. P
Slide 24: Choose & Book
For personal use only CHOOSE & BOOK How does it work? ¾ Hospitals must be registered as first choice or ECN providers ¾ Hospitals make outpatient clinic appointments available through Choose & Book website ¾ Clinics do not provide name of consultant, hence hospitals retain control of the patient ¾ G
Slide 25: Outlook – Ramsay Group Next Years
OUTLOOK – RAMSAY GROUP For personal use only NEXT 3 YRS • Australia ¾ Strong organic growth to continue ¾ Strong industry fundamentals to underpin growth ¾ Will investigate opportunities to invest in hospitals where there are no competition issues and/or in health care businesses close to core compe
Slide 26: Outlook – Ramsay Group FY08
OUTLOOK - RAMSAY GROUP FY08 For personal use only • Capio UK performing to expectations, 1.5-2.0 cents/share dilutive in FY08 • Capio UK expected to be Core EPS accretive in FY10 and beyond -- this could be conservative • Including Capio UK, Ramsay is targeting low double-digit growth for the total
Slide 27: Questions
For personal use only QUESTIONS 27
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