Spire Healthcare Group Plc · LSE:SPI
Spire Healthcare — FY2020 Earnings Presentation
51 slides from Spire Healthcare's earnings presentation, Mar 4, 2021
Slide 1: FY 20 Results Presentation
FY 20 Results Presentation 4 March 2021
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 Cora will moderate the session and unmute your line for you to ask your question Any problems please e mail Laura.Young@ spirehealthcare.com 3
Slide 4: Agenda
Agenda FY 20 Overview Justin Ash, Chief Executive Officer FY 20 Financial Review Jitesh Sodha, Chief Financial Officer Operations and Strategy Review John Forrest, Chief Operating Officer Q&A 4
Slide 5: FY 20 Overview
FY 20 Overview Justin Ash, Chief Executive Officer
Slide 6: FY 20 highlights
FY 20 highlights Provided vital Strong private Operational Strengthened the support to NHS momentum when efficiencies driving Spire business and during COVID COVID restrictions financial returns delivered Purpose pandemic eased Strong platform to deliver growth in 2021 and beyond 6
Slide 7: FY / YTD 21 highlights
FY 20 / YTD 21 highlights Provided vital support to NHS during COVID Strong private momentum when COVID pandemic restrictions eased • >210,000 NHS patients seen • Private income rebounds whenever capacity allowed • 33,000 cancer admissions • Self-pay outpaced PMI • Q1 21 – urgent response • Admissio
Slide 8: FY 20 highlights
FY 20 highlights Built momentum in returns and operational Strengthened medical and clinical governance efficiencies • Strong H2 performance • Green pathways allowed rapid return to near normal capacity • Revenues up 6% in H2 20 (vs H2 19) • Over 90% of colleagues vaccinated • EBITDA up 8% in H2 • 9
Slide 9: Spire teams delivered on our Purpose in 2020
And Spire Healthcare’s teams delivered on our Purpose in 2020 Making a positive difference to our patients’ lives through outstanding personalised care 83% agree that our 92% agree that our 94% agree that our care has made a care was care was positive outstanding personalised difference Source: Spir
Slide 10: 2020/2021 evolution supports Spire strategy
2020/2021 evolution supports Spire strategy First choice for Improving NHS key Uncompromising private on patient safety revenue, profit partner patients and cash • Building demand • Potential waiting list • Move to higher • Resilient during of 10m Acuity unprecedented year • Favourable consumer sent
Slide 11: Key plans launched in 2021 to build the Spire strategic platform
Key plans launched in 2021 to build the Spire strategic platform First choice for Improving NHS key Uncompromising private revenue, profit partner on patient safety patients and cash Leverage Efficiency Maximise Invest for Invest in Invest in digital and margin capacity growth Purpose ESG progress r
Slide 12: Investing in ESG to underpin Purpose
Investing in ESG to underpin Purpose • Spire Purpose aligns business and ESG principles through positive social impact Carbon reduction versus previous 5YP 60.0 • Continued focus on our people 50.0 • Key partner role with NHS 40.0 • New target to reach zero carbon emissions by 2030 30.0 • Emissions
Slide 13: Core assumptions on 2021 operating environment
Spire Healthcare core assumptions on 2021 operating environment Q1 Q2 H2 • High COVID prevalence • Vaccine programme • COVID prevalence low begins to take effect • Second dose of vaccine • National lock-down • COVID prevalence programme begins to take • NHS overwhelmed in reducing effect some areas
Slide 14: Core assumptions on 2021 operating environment
Spire Healthcare core assumptions on 2021 operating environment Q1 Q2 H2 Private Growth in non-surge Self-pay strong Normal private capacity and sites demand demand PMI growing Framework building Full momentum on NHS with focus on high Q1 contract Framework, returning demand clinical priority, long
Slide 15: 2021: Cautiously optimistic in uncertain environment
2021: Cautiously optimistic in uncertain environment Cautiously optimistic that On track in Q1 despite trading will return to 2019 unexpected environment levels in 2021 Making a positive difference to our patients’ lives through outstanding personalised care 15
Slide 16: FY 20 Financial Review
FY 20 Financial Review Jitesh Sodha, Chief Financial Officer
Slide 17: FY key messages – COVID financial impact well managed
FY 20 key messages – COVID financial impact well managed COVID specific impacts Other impacts relevant to 2021 NHS contracts run Higher private ARPC Comparators with Strong recovery of April 20 - Mar 21, prior year private volumes in PMI +6.8% phased transition in challenging Q4 Self pay +14.1% 2021
Slide 18: Financial headlines FY 20: P&L
Financial headlines FY 20: P&L Total Adjusting Revenue Adjusted EBITDA Adjusted EBIT items £919.9m £161.1m £67.1m £212.5m (FY 19: £980.8m) (FY 19: £189.0m) (FY 19: £97.6m) (FY 19: £3.2m) 18
Slide 19: Financial headlines FY 20: balance sheet
Financial headlines FY 20: balance sheet Net bank debt Capex improved FCF* £50.8m Dividend £34.7m £314.5m suspended (FY 19: £62.5m) (H1 20: £330.6m, (FY 19: £51.0m) FY19: £330.0m) * FCF defined as EBITDA less rent less capex 19
Slide 20: Total admissions in 2020 only 16% below 2019
Total admissions in 2020 only 16% below 2019 Volume Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-21 2020 2019 20
Slide 21: NHS admissions increased 21% versus 2019
NHS admissions increased 21% versus 2019 Volume Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2020 2019 21
Slide 22: Private income eliminated in 1st lockdown, and rebounded on easing
Private income eliminated in 1st lockdown, and rebounded on easing H1 private revenue (£m) and growth H2 private revenue (£m) and growth 400 400 350 4.1% 350 7.6% 2.5% 2.8% 2.6% 4.1% 0.3% 1.9% 300 300 (16.5%) 250 250 (42.3%) 200 200 150 150 100 100 50 50 0 0 H1 16 H1 17 H1 18 H1 19 H1 20 H2 16 H2 17
Slide 23: Self-pay performance is above PY in non-surge sites
Volume 1500 2000 2500 3000 3500 4000 1000 500 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
Slide 24: PMI outpatient consultations back to PY in non-surge sites
Volume 1,500 2,000 2,500 3,000 3,500 4,000 1,000 500 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.
Slide 25: COVID impacted cost base
COVID impacted cost base EBITDA bridge 250 £91.0m £31.8m 200 £189.0m £112.1m £7.3m £161.1m 150 £32.3m 100 50 0 2019 Private volumes Private ARPC NHS contract COVID costs Thank you bonus 2020 25
Slide 26: Managed cash well
Managed cash well H1 20 (£m) H2 20 (£m) FY 2020 (£m) Cash from operating activities 58.8 101.2 160.0 Working capital movement 13.2 (17.1) (3.9) Capex (28.1) (18.2) (46.3) Financing activities (47.4) (50.5) (97.9) Tax 3.6 0 3.6 Increase in cash 0.1 15.4 15.5 Opening cash balance 90.8 90.9 90.8 Closin
Slide 27: Supportive lenders and extension of Senior Facility maturity
Supportive lenders and extension of Senior Facility maturity Waiver agreed for June Lenders have also agreed 21 testing. to one year extension to Year end net debt to Monthly Liquidity the maturity of the Senior EBITDA 3.9x Measure is now in effect Facility to July 2023 Dec 20 (£m) Dec 19 (£m) Bank
Slide 28: Financial headlines FY 20: Adjusting items
Financial headlines FY 20: Adjusting items • Adjusting items taken against Operating Profit of £213.3m • Total Adjusting items of £212.5m after netting a credit of £0.8m which is reported against interest charges • The Adjusting items charge is largely comprised of two items: • £200m write down in G
Slide 29: Outlook
Outlook Recovery of private volumes Q1 in-line despite new COVID Trading returning to 2019 and new NHS Framework variant levels contract Uncertainties from changes in COVID environment and testing regime 29
Slide 30: Operations and Strategy Review
Operations and Strategy Review John Forrest, Chief Operating Officer
Slide 31: Preparing for the future
Preparing for the future Leverage Efficiency Maximise Invest for Invest in digital and margin capacity growth Purpose progress recovery Colleague Back to 2019 COVID costs 77,500 virtual £50m capex in turnover activity levels in substantially consultations 2020 reduced from H2 offset in H2 15% to 12%
Slide 32: Leverage digital progress
Leverage digital progress Easy to do business with Improved efficiency Digital innovation • Eliminate unnecessary tasks • Digital marketing • Sales and booking process • Standardise • Direct booking • Electronic patient record • Leverage scale • Virtual consultation • E-prescribing • One best way •
Slide 33: Social media strategy evolved through COVID
Our social media strategy evolved through COVID resulting in increased share of voice and positive sentiment across amongst our target consumers Patient COVID information Supporting the NHS Patient health and service information Content highlighted the partnership between Spire and the NHS and the c
Slide 34: Weekly relevant enquiries consistently above PY from H2 20
Spire’s weekly relevant enquiries consistently above PY from H2 20 10000 2019 2020 2021 9000 8000 7000 6000 Enquiries 5000 4000 3000 2000 1000 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 34
Slide 35: Increased online booking activity in 2020
Increased online booking activity in 2020 • 33% increase in bookings made via our portals in FY 20 versus FY19 • Despite closing the PMI booking portal from mid-March to early July • Online bookings provide Spire Healthcare with more visibility over the patient pathway Total online bookings across a
Slide 36: Maximise Capacity
Maximise Capacity Build back differently Optimise utilisation Higher acuity • Increased operating hours • Nottingham CCU open - now 5 in estate • Rebuild lists and set up for efficient use • Leverage NHS relationship to open further sites • Optimise activity mix • Support own activity and increased
Slide 37: Purpose and culture
Purpose and culture Recruit Retain Develop • New regional recruitment • Retention measures • Continuing professional model development • Agency 5% of clinical • Overseas nurse recruitment costs (from 8% in FY19) • Focus on inclusion and diversity • 175 joined in • New starter retention 2018/2019 • C
Slide 38: Efficiency & Margin Recovery
Efficiency & Margin Recovery Offset COVID costs Operational efficiency • Operational control • Improve procurement • Open in-house testing lab • Prosthesis rationalisation • Adopt new testing platforms including • Improve revenue capture lateral flow • Imaging efficiency • Reduce labour costs Target
Slide 39: Investing for growth
Investing for growth • £90-95m planned capex investments Maintenance capex Growth capex • Estate refurbishment and upgrades • MRI and CT scanners Leverage our network Reduce labour costs • Plain film and diagnostic imaging • Capacity enhancement • Digital development Return on capital employed 39
Slide 40: Summary
Summary On track in Q1, well 2020 managed well Built capability Demand is building positioned for long term growth Making a positive difference to our patients’ lives through outstanding personalised care 40
Slide 41: Appendix
S2 Spire Healthcare Appendix Corking after ya
Slide 42: Technical guidance
Technical guidance Technical guidance for 2021 Total rent c.£82m D&A c.£92-96m Capex c.£90-95m Net financing costs c.£82-87m Tax Effective corporate tax rate slightly above the statutory rate of 19% Net bank debt c.£295-335m 42
Slide 43: NHS England contracts negotiated
3 NHS England contracts negotiated • 23 March 2020 – Cost recovery contract • All hospitals, staff, clinical expertise and resources made available to NHS • Cash costs covered including operating costs, overheads, rent and interest plus a cost of capital • Credit to NHS for private work completed •
Slide 44: Revenue by payor
Revenue by payor H1 20 H1 19 Variance H2 20 H2 19 Variance FY 20 FY 19 Variance (£m) (£m) (%) (£m) (£m) (%) (£m) (£m) (%) PMI 145.9 247.0 (40.9%) 191.7 244.9 (21.7%) 337.6 491.8 (31.4%) Self-pay 47.6 88.6 (46.2%) 88.0 90.2 (2.4%) 135.6 178.8 (24.1%) Total private 193.5 335.5 (42.3%) 279.7 335.1 (16.
Slide 45: Operating cost analysis
Operating cost analysis FY 20 (£m) FY 20 (% sales) FY 19 (£m) FY 19 (% sales) Clinical staff 212.6 23.1% 203.3 20.7% Direct costs 192.8 21.0% 223.9 22.8% Medical fees 58.7 6.4% 102.2 10.4% Cost of sales 464.1 50.5% 529.4 54.0% Gross profit 455.8 49.5% 451.4 46.0% 45
Slide 46: Self-pay recovery in Q4 20, outpatient activity remains strong in Q1 21
Volume 1000 2000 3000 4000 6000 5000 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 14.03.20
Slide 47: Self-pay recovery outpaces PMI on a total basis
Volume 1000 2000 3000 4000 6000 5000 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 14.03.20
Slide 48: Spire teams delivered on our Purpose in 2020
And Spire Healthcare’s teams delivered on our Purpose in 2020 Making a positive difference to our patients’ lives through outstanding personalised care Thinking about the care you have received from Spire [hospital name], how much do you agree or disagree that … It has made a positive difference to
Slide 49: Public more aware of private hospital providers
Public more aware of private hospitals proposition 54% of our target market 62% now see private are aware of the role of the hospital providers in a more private sector to support the positive light NHS 74% of our target market 51% more likely to consider are aware of the likely a private hospital t
Slide 50: Spire target market less anxious than UK population on average
Spire target market less anxious than UK population on average How would you feel about visiting a hospital currently, if you were in need of treatment? All UK adults Spire target audience 14 Not at all anxious Not at all anxious 25 25 Not that anxious Not that anxious 34 Fairly anxious 38 Fairly an
Slide 51: 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 Improvement Elland Good London East Good Thames Valley Good Brighton/Montefiore Outstanding Fylde Coast Good Manchester Outstanding Tunbridge Wells Good Requires Bristol Good Gatwic
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