Healius Limited · ASX:HLS
Healius — FY2020 Earnings Presentation
43 slides from Healius's earnings presentation, Aug 21, 2020
Slide 1: FY 2020 Results
FY 2020 Results Year ended 30 June 2020 21 August 2020
Slide 2: Group results
Group results 1 2 Group Underlying Reported $m FY 2020 FY 2019 FY 2020 FY 2019 Revenue 1,600.4 1,565.4 1,597.4 1,566.4 EBIT 102.7 125.9 76.0 107.6 NPAT (continuing operations) 55.4 70.3 72.0 57.2 NPAT (inc. discontinued operations) (70.5) 55.3 Underlying NPAT • Above pcp and in line with guidance un
Slide 3: COVID-19 impact
COVID-19 impact • Group UNPAT tracking above pcp and in line with guidance until mid-March • Significant and sharp volume reductions in March and April during national lock-down • Initiatives to reduce costs at a time when extent of downturn unknown: o Cooperation from staff/unions enabling labour m
Slide 4: COVID-19 impact (continued)
COVID-19 impact (continued) Pathology and Imaging before and during lock-down Revenue ($m) EBIT ($m) 1,160.1 7.1 38.9 115.1 1,128.3 111.0 5.6 1.5 Pathology 38.7 391.3 11.7 1.8 26.3 376.7 23.3 Imaging 17.2 FY19 Jul-Feb Mar-Jun FY20 FY19 Jul-Feb Mar-Jun FY20 4.0 4 FY 2020 Results
Slide 5: Trading and Healius Primary Care sale update
Trading and Healius Primary Care sale update Trading • Overall good start to FY21, in a dynamic environment • Pathology: o Strong volumes in July and into August. COVID-19 testing escalation more than offsetting weaker underlying volumes o Commercial COVID growth as businesses endeavour to reopen wi
Slide 6: Balance sheet management
Balance sheet management Improved net debt Cash flow maintained despite disruption Net debt Operating Cash Flow • Stringent cash management delivered (before AASB 16 in FY20) 678 666 improved net debt position in FY20 • Liquidity at 30 June 2020 ~ $424m 127.6 153.4 following successful refinancing o
Slide 7: Streamlined portfolio
Progress on Strategic Agenda Streamlined portfolio Foundation for growth Divest Healius Primary Care • $500m enterprise value was not fully reflected in historic share price • Proceeds of $470m1 to deliver significant balance sheet flexibility • Improved free cash flow and removes capital-intensive
Slide 8: Sustainable Improvement Program FY19
Sustainable Improvement Program FY19 Sustainable Improvement Program FY19 Focus on quick-win savings FY20 Operating Cost Base $m 992 • FY19 launched SIP to systematically reduce costs and improve efficiencies 481 • Within ~$1.7b cost base, pathology and imaging labour, Labour pathology property and
Slide 9: Sustainable Improvement Program FY20: Cost Bridge
Sustainable Improvement Program FY20: Cost Bridge Driving efficiencies and price savings to offset cost inflation 34 37 1,646 32 14 1,571 32 Underlying Operating Expenditure ($m) FY19 Increase: Increase: Continuing Ops1: Continuing Ops1: SIP savings FY20 Healius full year Contracted Other increases
Slide 10: Sustainable Improvement Program FY20: Savings
Sustainable Improvement Program FY20 Sustainable Improvement Program FY20: Savings $37m1 in-year saving and $54m2 in run-rate saving achieved SIP Savings $m Category Key Initiatives Total 37 • Labour initiatives $13m • PIP initiatives around ACC and labs Pathology 17 • Role consolidations • Other $4
Slide 11: Sustainable Improvement Program FY21
Sustainable Improvement Program FY21 Driving margin expansion Program focused on addressing more complex but higher value structural improvements to drive margin improvement beyond BAU trading Expanded scope to include revenue growth initiatives and growth capex Digitisation and automation Opera
Slide 12: FY 20 overview
FY 20 overview Regular trading updates to be provided Results Current trading FY20 underpinned by Pathology’s strong trading Strong trading in Pathology with elevated COVID testing supporting positive outlook for FY21 Proactive response to COVID-19 with testing facilities, drive- throughs and
Slide 13: Divisional Results & Strategy
Divisional Results & Strategy
Slide 14: Pathology
Pathology Underlying FY 2020 FY 2019 Better/ $m $m (worse) % Revenue 1,160.1 1,128.3 2.8 EBITDA 142.3 136.1 4.6 Depreciation (20.9) (19.8) (5.6) Amortisation (6.3) (5.3) (18.9) EBIT 115.1 111.0 3.7 Total capital expenditure 36.9 35.1 (5.1) Revenue • Volumes down 1.5% (3.6% excluding COVID-19 testing
Slide 15: Pathology: Strategic initiatives
Pathology Strategic initiatives Revenue growth • Commercial opportunities (COVID testing for Federal Government, AFL, passengers travelling to/via UAE) • Continued growth in specialties including genetics (6% rise in FY20 to $6m EBIT) Network optimisation • Right-sizing ACC and laboratory footprint
Slide 16: Our current LIS Program focuses on 3 priority areas
Pathology LIS Description Benefits • Development of a modern database for core • Greatly reduced risk of disruption to core pathology laboratory activity with additional work to support activities e.g. database end-of-life, IT security, billing Immediate risk third party services e.g. Medicare APIs,
Slide 17: Imaging
Imaging Underlying FY 2020 FY 2019 Better/ $m $m (worse) % Revenue 376.7 391.3 (3.7) EBITDA 31.8 53.8 (40.9) Depreciation (12.1) (13.4) 9.7 Amortisation (2.5) (2.0) (25.0) EBIT 17.2 38.4 (55.2) Total capital expenditure 13.4 22.1 39.4 Revenue • 4.5% up Feb Y-T-D • 19.1% down March-June with COVID-19
Slide 18: Imaging: Strategic initiatives
Imaging Strategic initiatives Revenue growth • Continue to develop and grow higher margin hospital channel including new tenders • Leverage iCAR to target top 5 speciality referral groups to grow revenue Digitisation • iCAR roll-out complete (exc. certain ‘parked’ sites) improving radiologist workfl
Slide 19: Montserrat
Montserrat Underlying FY 2020 FY 2019 1 Better/ $m $m (worse) % Revenue 34.2 18.9 81.0 EBITDA 5.4 1.8 200.0 Depreciation (2.3) (1.2) (91.7) Amortisation 0.0 (0.2) 100.0 EBIT 3.1 0.5 520.0 Total capital expenditure 2.6 4.2 (38.4) Revenue • Strong growth in 4 new sites2 including flagship Westside Pri
Slide 20: IVF / Healius Day Hospitals
IVF / Healius Day Hospitals IVF (Adora Fertility) Healius Day Hospitals • $18.7m revenue up 10% on volume decline of 6% with 2H 20 • $12.5m revenue with 2H 20 volumes impacted by restrictions on elective volumes impacted by COVID-related restrictions surgery • $3.2m EBIT loss including COVID-19 impa
Slide 21: Day Hospitals: Strategic initiatives
Day Hospitals Strategic initiatives Montserrat – strong growth expected to build third platform of Healius portfolio • Continued ramp-up of 4 new sites which are expected to double contribution in FY21 • Oversight of cost control and efficiency • Inorganic growth through acquisition Healius Day Hosp
Slide 22: Corporate
Corporate Underlying FY 2020 FY 2019 Better/ $m $m (worse) % Revenue 0.1 0.3 (66.7) EBITDA (15.3) (15.8) 3.2 Depreciation (4.3) (3.1) (38.7) Amortisation (3.3) (1.3) (153.8) EBIT (22.9) (20.2) (13.4) Total capital expenditure 9.7 6.6 47.0 Support and corporate services • $90m costs managed at a grou
Slide 23: Cash flow, gearing & dividend
Cash flow, gearing & dividend
Slide 24: Cash flow
Cash flow 400 405 (68) 350 (2) (56) 300 $m 250 339 (66) 15 200 150 217 (186) 100 50 (21) 25 0 Gross Interest Tax Operating Maintenance Growth capex Cash flow Proceeds from Lease Dividends Net increase operating cash flow capex after investing borrowings payments in cash cash flow OCF • OCF before AA
Slide 25: Gearing and dividends
Gearing and dividends Reported As at $m 30 June 2020 30-Jun-19 1 Bank and finance debt 810.5 797.9 2 Cash (144.5) (119.7) Net debt 666.0 678.2 Equity 1,935.4 2,051.1 3 Bank gearing ratio (covenant <3.5x) 2.7x 2.4x Bank interest ratio (covenant >3.0x) 8.9x 9.5x Net debt reduction Gearing • Significan
Slide 26: Appendix: Healius Group today
Appendix Healius Group today
Slide 27: A specialist diagnostic and day hospitals business with leading market positions
A specialist diagnostic and day hospitals business with leading market positions and scalable platforms Pathology Imaging Day Hospitals • Scale player in mature market (#2) • Scale player in growing market (#3) • History of profitable growth in Montserrat • 1 in 3 pathology samples tested in • 3m+ r
Slide 28: A market leading network
A market leading network Australia-wide coverage1 17 Total Sites 654 Total Sites 2,399 Total sites 17 214 Total Sites 33 614 6 2,234 2,137 ACCs Pathology 97 Laboratories v 47 Total Sites 202 5 6 779 Total Sites 41 6 15 15 Montserrat ACT Day Hospitals 4 IVF clinics 36 Total Sites 712 64 2 33 3 146 31
Slide 29: Appendix: Reconciliations
Appendix Reconciliations tihealius
Slide 30: Divisional reconciliation
Divisional reconciliation Underlying EBIT FY 2020 Pathology Imaging Day Hospitals Corporate Group1 $m Revenue 1,160.1 376.7 65.4 0.1 1,600.4 EBITDA 142.3 31.8 (1.7) (15.3) 157.0 Depreciation (20.9) (12.1) (4.9) (4.3) (42.3) Amortisation (6.3) (2.5) (0.2) (3.3) (12.0) EBIT 115.1 17.2 (6.8) (22.9) 102
Slide 31: Day Hospitals reconciliation
Day Hospitals reconciliation Underlying EBIT 31 FY 2020 Results
Slide 32: Underlying v reported reconciliation
Underlying v reported reconciliation FY 2020 Discontinued Non Underlying Non-Underlying Reported AASB 16 impact Underlying $m Operations Items ATO case EBIT 76.0 43.2 (16.5) 102.7 Interest (29.6) (23.6) 29.7 (23.5) PBT 46.4 13.2 79.2 Income Tax benefit/(expense)1 25.6 (46.6) (4.0) (23.8) NPAT contin
Slide 33: Discontinued operations
Discontinued operations Discontinued Operations FY 2020 FY 2019 Proft/(Loss) on disposal $m $m Revenue from Contracts with Customer 253.7 243.9 Expenses (236.3) (234.9) Earnings before interest, tax and impairment 17.4 9.0 Slide 34 Net finance costs (21.5) (8.6) Profit before Tax (4.1) 0.4 Impairmen
Slide 34: Discontinued operations (cont'd)
Discontinued operations (cont’d) 34 FY 2020 Results
Slide 35: Non-underlying items
Non-underlying items FY 2020 $m Strategic projects 18.3 Strategic projects in Pathology, Imaging and Corporate. Details slide 36 Montserrat acquisition 14.5 Montserrat earn-out increased due to expected improvement in performance Impairments 11.6 Primarily impairments for Healius Day Hospitals and E
Slide 36: Strategic projects
Strategic projects Only Laboratory Platforms to remain in FY21 and onwards FY 2020 Laboratory iCAR Corporate Total $m Platforms Total Opex (adjusted between reported and underlying) 9.9 3.0 5.4 18.3 Property, plant & equipment 1.8 0.8 0.0 2.6 Intangibles 4.0 4.1 0.0 8.1 Total Capex 5.8 4.9 0.0 10.7
Slide 37: Tax case 2003-2007
Tax case 2003-2007 • Healius was advised in 2015 by the Commissioner of Taxation (“the Commissioner”) that lump sum payments made by it to healthcare practitioners for the financial years 2010 to 2014 were tax deductible. • Healius subsequently filed an application for similar tax deductions for the
Slide 38: AASB 16: Key impacts FY20
AASB 16: Key impacts FY20 AASB 16, which removes the distinction between operating and finance leases, was adopted on 1 July 2019. It has no economic impact on Healius, nor on its covenants, cash flows or shareholder value. The financial impacts are as follows: • On the P&L, interest and depreciatio
Slide 39: AASB 16: Key impacts FY20
AASB 16: Key impacts FY20 P&L FY 2020 FY 2020 $m $m Property & other expenses 180.2 Operating lease expense reversed EBITDA 180.2 Depreciation (163.7) Depreciation of right of use asset recognised EBIT 16.5 Finance costs (29.7) Interest paid on lease liability recognised Profit before tax (13.2) Tax
Slide 40: AASB 16: Key impacts FY20
AASB 16: Key impacts FY20 40 FY 2020 Results
Slide 41: AASB 16: Key impacts going forward
AASB 16: Key impacts going forward Key P&L Description Illustration Forward Outlook P&L Impact Impact Driver • Interest reduces over time as • Operating lease lease liability reduces NEW payments previously P&L impact will reverse LEASES recognised as an • AASB 16 Less favourable to as the interest
Slide 42: Disclaimer
Disclaimer This presentation has been prepared by Healius Limited (ACN 064 530 516) (‘HLS’). Material in this presentation provides general background information about HLS which is current as at the date this presentation is made. Information in this presentation remains subject to change without n
Slide 43: tinealius
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