Integrated Diagnostics Holdings Plc · LSE:IDHC
Integrated Diagnostics — 9M 2023 Earnings Presentation
68 slides from Integrated Diagnostics's earnings presentation, November 2023
Slide 1: IDH Results Presentation
IDH Results Presentation November 2023
Slide 2: Table of Contents
Table of Contents IDH At a Glance 9M 2023 Results Overview Key Investment Highlights Our Market Our Business Model Financial Position and Performance Growth Strategies Governance 2 INTEGRATED DIAGNOSTICS HOLDINGS
Slide 3: Who We Are (I/II)
Who We Are (I/II) Integrated Diagnostics Holding is a leading, fully-integrated provider of high-quality medical diagnostic services with a footprint spanning Egypt, Jordan, Nigeria, Sudan, and Saudi Arabia An integrated diagnostics provider… Pathology Radiology Immunology Microbiology Haematology E
Slide 4: Who We Are (II/II)
Who We Are (II/II) The Company’s reach, scale, and service quality are unmatched across its markets of operation Track Record Accreditations +40 years Sole CAP & ACR Accredited lab and scan First lab established in 1979 in Africa Jordan Patients Test Portfolio c.10 MN +3,000 Egypt Per year Tests Sau
Slide 5: Our Service Segments
Our Service Segments IDH’s pathology offering currently contributes the lion share of revenue and patients. The Company’s radiology services are quickly gaining momentum with their contribution to IDH’s top-line doubling in the last twelve months Pathology – 94% of Revenues1 Radiology – 6% of Revenu
Slide 6: Our Geographies
Our Geographies IDH currently operates the largest branch network amongst private providers in Egypt and boasts an established presence in four key markets in the Middle East and Africa Egypt Jordan Nigeria Sudan 1979 537 2011 27 2018 12 2011 18 First began Branches (51% in Acquisition Branches Acqu
Slide 7: Our Patients
Our Patients IDH serves two principal types of patients: contract and walk-in Around 70% of total revenue generated across the two segments is paid in cash Contract Patients1 Walk-In Patients IDH’s contract clients include institutions who enter into one-year IDH’s walk-in clients, also referred to
Slide 8: IDH Post Covid-19: A new chapter (I/II)
IDH Post Covid-19 : A new chapter (I/II) During the Covid-19 era, IDH successfully transformed its business, expanding its service offering and delivery capabilities, and setting the foundation for a new chapter of sustainable growth, testament to its business agility and resilience Test Offering an
Slide 9: IDH Post Covid-19: A new chapter (II/II)
IDH Post Covid-19: A new chapter (II/II) During the Covid-19 era, IDH successfully transformed its business, expanding its service offering and delivery capabilities, and setting the foundation for a new chapter of sustainable growth, testament to its business agility and resilience Improved Efficie
Slide 10: 9M 2023 Results Overview
9M 2023 Results Overview 10 INTEGRATED DIAGNOSTICS HOLDINGS
Slide 11: A Turbulent Operating Environment
A Turbulent Operating Environment IDH continues to post impressive financial and operational results despite difficult economic circumstances across its markets A weakening Egyptian pound | EGP:USD Record-high inflation eating at patients’ purchasing power 30.9 38.0% 37.4% 30.9 30.9 30.9 30.9 30.9 3
Slide 12: Q3 2023 Results Snapshot
Q3 2023 Results Snapshot IDH booked its strongest quarter of 2023 in Q3 2023, with both top- and bottom-line profitability improving significantly on the back of record-high test volumes and average revenue per test EGP 1,182 mn EGP 480 mn (41% margin) EGP 411 mn (35% margin) EGP 176 mn Revenue1 in
Slide 13: 9M 2023 Results Snapshot (I/II)
9M 2023 Results Snapshot (I/II) IDH recorded positive consolidated revenue growth, even when including significant contributions from Covid-19 testing in the comparable period EGP 3,054 mn EGP 1,138 mn EGP 873 mn EGP 387 mn Revenue1 in 9M 2023 Gross Profit in 9M 2023 Normalised EBITDA2 in 9M 2023 Ne
Slide 14: 9M 2023 Results Snapshot (II/II)
9M 2023 Results Snapshot (II/II) Conventional revenue growth maintained its strong growth momentum, with Q3 2023 booking the Company’s strongest quarter in 2023 Conventional revenues continue growing solidly supported by higher volumes Conventional revenue per test currently stands 62% above levels
Slide 15: Continued Growth at Egypt's Radiology Venture
Continued Growth at Egypt’s Radiology Venture Al Borg Scan, Egypt’s radiology venture, continues posting impressive top-line growth on the back of increased test volumes and higher average revenue per test Sustained growth in radiology revenues… …on the back of increased test volumes… (Scans perform
Slide 16: Profitability Overview
Profitability Overview Lower profitability down the income statement largely reflects increases in salary and wage expenses, increases in IDH’s marketing expenses to support the rollout of new branches, and increased inflationary pressures as a result of a weakened EGP IDH recorded only a modest ris
Slide 17: Non-Recurring Items in 9M-2023
Non-Recurring Items in 9M-2023 IDH booked higher EBITDA profitability than reported figures due to several one-off expenses recorded during the period One-offs (impacting EBITDA) +EGP 6.5 million +EGP 5.0 million +EGP 12 million Saudi Arabia Sudan Provision Vocational Training Pre-operating expenses
Slide 18: Revenue – EBITDA Bridge
Revenue – EBITDA Bridge 9M 2023 IDH Revenue - EBITDA Bridge | M-EGP 3,054 (668) (793) (8) (67) (53) (43) (77) (473) 873 22% 26% - 2% 2% 1% 3% 15% 29% 9M 2023 Revenue Raw material Wages & Salaries Rent Transportation Maintenance Utilites Marketing and advertising Other 9M 2023 EBITDA 9M 2022 IDH Reve
Slide 19: EBITDA – Net Profit Bridge
EBITDA – Net Profit Bridge 9M 2023 IDH EBITDA – Net Profit Bridge | M-EGP Earnings Before Tax | M-EGP Income & Deferred Tax, Effective Tax Rate 654 | M-EGP, % (251) 38% (197) 71 584 35 34% 28% 180 162 28% 9M 2022 9M 2023 9M 2022 9M 2023 Income Tax Deferred Tax 19 INTEGRATED DIAGNOSTICS HOLDINGS
Slide 20: Solid Financial Position
Solid Financial Position The Group maintains a robust financial position, with a liquid balance sheet thanks to a strong cash generation profile allowing for consistent dividend payouts Consolidated Cash Balance | EGP mn Net Debt Balance* | EGP mn Gross Fixed Assets | M-EGP -3% +11% 816 794 2,453 2,
Slide 21: 9M 2023 Capital Expenditure
9M 2023 Capital Expenditure IDH CAPEX recorded EGP 245m in 9M FY23, including both, core recurring CAPEX items and non-core non-recurring items. This figure represented 8.0% of 9M FY23 total revenues. 3.3% 1.1% 0.1% 0.1% 1.2% 2.3% % of Net New Branches & Currency Revenue Warehouse IDH HQ Others Al B
Slide 22: Fixed Gross Assets Bridge
Fixed Gross Assets Bridge IDH Fixed Gross Assets Bridge by Account | M-EGP M-EGP 204 10.9% of total 1H 2023 revenue (8.3% excluding BG scan and translation) IDH Fixed Gross Assets Bridge by Region | M-EGP 0.17 22 INTEGRATED DIAGNOSTICS HOLDINGS
Slide 23: Segment Performance
Segment Performance Both IDH’s contract and walk-in segments witnessed significant conventional revenue growth in 9M 2023. Conventional revenue growth at IDH’s contract segment was dual driven by increases in test volumes and average revenue per test, while walk-in segment revenues were entirely dri
Slide 24: Segment Performance
Segment Performance IDH’s contract segment maintained its growth trend, remaining the major contributor to overall revenue and patient volumes in 9M 2023 Revenue Split Patient Split 21% 32% 37% 43% 9M 9M 9M 9M 57% 2022 2023 2022 2023 63% 68% 79% Walk-in Corporate Walk-in Corporate Walk-in Corporate
Slide 25: Regional Performance (I/II)
Regional Performance (I/II) IDH booked strong conventional revenue growth, with operations from its two biggest markets, Egypt and Jordan, continuing to post significant top-line expansion Revenue |M-EGP| Gross Profit |M-EGP| EBITDA |M-EGP| EGYPT 1,043 857 2,235 ▲12% 432 2,500 ▼20% 1,007 ▼35% 766 81
Slide 26: Regional Performance (II/II)
Regional Performance (II/II) Patients | ‘000 Tests | ‘000 Test per Patient | ‘000 Revenue per Test | ‘000 24,366 ▲3% 21,811 ▲12% 102 ▲0.1% 103 Egypt 1,101 393 24,366 5,846 20,710 ▲18% ▲8% 4.2 103 5,675 3.8 87 ▲18% 9M 2022 9M 2023 9M 2022 9M 2023 9M 2022 9M 2023 9M 2022 9M 2023 ▼64% 2,221 ▼16% ▲12% 1
Slide 27: Regional Performance: Local Currency
Regional Performance: Local Currency Revenue | M-LCY Gross Profit | M-LCY EBITDA | M-LCY 1,043 ▲12% 857 ▼20% Egypt 1,007 ▼35% 766 2,500 47% 40% 38% 31% 2,235 9M 2022 9M 2023 9M 2022 9M 2023 9M 2022 9M 2023 ▼39% 5.6 ▼60% 5.1 Jordan 17.7 3.1 ▼44% 2.9 10.8 27% 28% 25% 26% 9M 2022 9M 2023 9M 2022 9M 202
Slide 28: Continued Growth at Echo-Lab (Nigeria)
Continued Growth at Echo-Lab (Nigeria) IDH’s Nigerian operations reported year-on-year revenue growth of 16% in NGN terms in 9M 2023. Top-line growth was supported by a 22% year-on-year increase in average revenue per test (in local currency terms) in part reflecting the rising demand for the genera
Slide 29: Continued Ramp up at Al Borg Scan
Continued Ramp up at Al Borg Scan Al Borg Scan continued to build on the positive momentum from the start of the year to deliver further operational and financial growth in 9M 2023 EGP 108 MN 33% 18% 16% 14% 9M 2023 revenues 9M 2023 revenue contribution 9M 2023 revenue contribution 9M 2023 revenue c
Slide 30: Sudan's Conflict Continues to Impact Operations
Sudan’s Conflict Continues to Impact Operations Sudanese Conflict Updates On April 15, 2023, violent conflict erupted between two rival groups in Sudan: the Sudanese Armed Forces (SAF) and the Rapid Support Forces (RSF). As of 15 Oct 2023, more than 10,000 people had been killed and over 8,000 other
Slide 31: Outlook and Strategies (I/II)
Outlook and Strategies (I/II) In IDH’s home and largest market of Egypt, the Company’s priorities for the remainder of the year remain unchanged. Starting May, the Company saw a strong acceleration in revenues and volumes which has since carried through into July and August. Pricing Volumes Raw Mate
Slide 32: Outlook and Strategies (II/II)
Outlook and Strategies (II/II) Similar to Egypt, Jordan has seen a sustained acceleration starting in May and carrying through into July and August. Meanwhile, IDH is gearing up to launch its first two Saudi branches in December Jordan - Double-digit growth in LCU terms driven by solid volumes FY 20
Slide 33: Investment Highlights
Investment Highlights 33 INTEGRATED DIAGNOSTICS HOLDINGS
Slide 34: Investment Highlights
Investment Highlights IDH is an attractive investment opportunity with compelling fundamentals, present in fast- growing, under-served markets 1 Operating in highly fragmented markets characterised by strong structural growth drivers and high barriers to entry ✓ Deploys an asset-light business model
Slide 35: Fast-Growing, Underserved Markets
Fast-Growing, Underserved Markets 35 INTEGRATED DIAGNOSTICS HOLDINGS
Slide 36: Favorable Industry Dynamics
Favorable Industry Dynamics IDH’s home market of Egypt is underpinned by robust structural growth drivers Lab tests per capita (2012) High Disease Burden Operating in a still under- 23.2 penetrated market The Egyptian population is marked by a high incidence of lifestyle- related medical conditions,
Slide 37: Favorable Industry Dynamics
Favorable Industry Dynamics IDH’s markets are characterised by high barriers to entry Economies of Scale Accreditation of Brand & Reputation Market Reach Key Stakeholder Facilities Relationships IT-enabled platform, Attracting patients Patients are loyal to Fragmented markets Building a scalable cri
Slide 38: IDH is a Consumer-Facing Service Provider
IDH is a Consumer-Facing Service Provider The mechanics of healthcare markets in developing economies are markedly different from those in many Western healthcare industries IDH serves the private healthcare A hospital outpatient clinic or Perceived quality and safety market, where notably patients
Slide 39: Scalable Business Model
Scalable Business Model 39 INTEGRATED DIAGNOSTICS HOLDINGS
Slide 40: Asset-light Business Model
Asset-light Business Model IDH’s “Hub, Spoke and Spike” business model enables the Company to organically expand its reach in highly- fragmented markets with underserved diagnostic services demand Mega Lab: “Hub” • The Mega Lab, the largest automated lab in Egypt, serves as IDH’s diagnostic “Hub,” e
Slide 41: Our Mega Lab
Our Mega Lab IDH’s Mega Lab is the only CAP-accredited facility in Egypt, demonstrating the excellence of IDH’s patient care and confidence in the laboratory’s practices Capabilities Capacity • Mega Lab machines are capable of conducting a wide range of tests. • IDH’s Mega Lab doubled testing capaci
Slide 42: Key Supplier Relationships
Key Supplier Relationships IDH leverages its bargaining power with suppliers to maximize value in a business that is fundamentally about economies of scale. Combined with the long-tenure nature of its supplier contracts, this provides significant protection against short-term price fluctuations. Dyn
Slide 43: Strong Growth and Financial Position
Strong Growth and Financial Position 43 INTEGRATED DIAGNOSTICS HOLDINGS
Slide 44: Key Financial Performance Indicators
Key Financial Performance Indicators Since the Company’s IPO on the LSE in 2015, IDH has delivered consistent top- and bottom-line growth supported by a steady increase in volumes and increasingly favourable pricing across the Group’s service offering Revenues | EGP mn - CAGR Gross Profit, GPM | EGP
Slide 45: Key Financial Performance Indicators (USD)
Key Financial Performance Indicators (USD) IDH has successfully delivered positive top- and bottom-line growth in USD terms since listing on the LSE despite several devaluations and a difficult operating environment USD/EGP 35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0 01/07/2016 01/11/2018 01/11/2019 01/01
Slide 46: Regional Performance (I/II)
Regional Performance (I/II) Across its footprint, the Company deploys tailored expansion strategies which enable it to continue driving growth irrespective of the prevailing macroeconomic environment Revenue |M-EGP| EBITDA* |M-EGP| CAGR: 18% CAGR: 14% EGYPT 4,108 2,206 2,894 EGYPT 1,251 1,613 1,903
Slide 47: Regional Performance (II/II)
Regional Performance (II/II) Across its footprint, the Company deploys tailored expansion strategies which enable it to continue driving growth irrespective of the prevailing macroeconomic environment Patients | ‘000 Tests | ‘000 CAGR: 5% CAGR: 5% 8,467 7,612 6,881 5,927 6,505 6,301 26 28 30 30 80.3
Slide 48: Growth Strategies
Growth Strategies 48 INTEGRATED DIAGNOSTICS HOLDINGS
Slide 49: Future Growth Strategies
Future Growth Strategies IDH’s growth strategies rely on leveraging its competitive advantages to achieve four strategic goals Expand Customer Reach Expand Geographically Beyond opening laboratories in new In addition to organic expansion, the Company geographies, IDH is reaching out to new continue
Slide 50: Expanding Customer Reach – Growing In Egypt
Expanding Customer Reach – Growing In Egypt The Group enjoys ample growth room in Egypt thanks to its market leading position and extensive reach, attractive underlying fundamentals, and favourable regulatory environment Reach and penetration Solid Fundamentals Universal Healthcare Act New growth op
Slide 51: Diversifying Service Offering – Al Borg Scan Ramp-Up
Diversifying Service Offering – Al Borg Scan Ramp-Up IDH’s radiology venture, Al Borg Scan, continues expanding its top line on the back of increased test volumes and average revenue per test 2018 7 branches EGP 280 mn 460 k Covering Cairo from East to West Revenue Scans Performed Fastest growing ch
Slide 52: Diversifying Service Offering – Al Borg Scan Expansion Updates
Diversifying Service Offering – Al Borg Scan Expansion Updates Al Borg Scan operates six branches, two of which were inaugurated in 2022. The Group also recently earned the prestigious ACR (American College of Radiology) accreditation for Al Borg Scan’s Nuclear Medicine and ultrasound units. Rationa
Slide 53: Al Borg Scan Maintains Growth Trajectory
Al Borg Scan Maintains Growth Trajectory IDH’s Egyptian radiology venture, Al Borg Scan, continues expanding its top-line and expanding its contribution to Egypt revenues, driven by sustained increases in test volumes and higher revenue per test Revenue, % of Egypt revenues | Scans Performed | ‘000
Slide 54: House Call Services (Egypt and Jordan)
House Call Services (Egypt and Jordan) IDH’s house call services, offered in both Egypt and Jordan, is becoming a primary contributor to top-line, averaging 15- 20% compared to a pre-pandemic contribution of c.10% House call services witnessed rising demand during the Covid-19 pandemic Expands Reach
Slide 55: Expanding Customer Reach – State-sponsored Initiatives
Expanding Customer Reach – State-sponsored Initiatives IDH’s nationwide presence and strong brand equity position it well to benefit from state-sponsored campaigns to increase awareness of preventative healthcare with diagnostic testing Duration Revenue Generated 8 months EGP 84 mn Nov ‘18 – Jun ‘19
Slide 56: Expanding Customer Reach – IDH Awareness Campaigns
Expanding Customer Reach – IDH Awareness Campaigns Parallel to state-sponsored initiatives, IDH also runs its own awareness campaigns focusing on specific diseases on a monthly basis and offering discounts on related testing IDH’s PCR Offers and Campaigns Discounts on PCR PCR testing for testing for
Slide 57: Diversifying Service Offering – New Investment in Wayak
Diversifying Service Offering – New Investment in Wayak IDH launches new subsidiary “Wayak” to offer data-driven healthcare services, utilising data analytics and artificial intelligence to capitalise on IDH’s database of over c.13 million patients Wayak Services Medication to be Service provider On
Slide 58: Growing Geographic Footprint – Investment Rationale
Growing Geographic Footprint– Investment Rationale IDH’s regional expansion strategy targets acquisitions in African, Middle Eastern and Asian markets where it can deploy its proven business model and generate accretive value Growing economies and strong Similar healthcare market structure to demogr
Slide 59: Growing Geographic Footprint – Nigeria Expansion
Growing Geographic Footprint – Nigeria Expansion In December 2017, IDH further expanded its geographical footprint with an investment in Nigeria, a value-accretive acquisition in a large, fragmented and underpenetrated diagnostic services market where our business model is well-suited to capitalise
Slide 60: Nigeria Branch Roll-Out and Renovations
Nigeria Branch Roll-Out and Renovations Opebi Branch Renovation and Rebranding New Victoria Island Branch Area 11 Branch Renovation and Rebranding Benin Branch Renovation & Rebranding 60 INTEGRATED DIAGNOSTICS HOLDINGS
Slide 61: Growing Geographic Footprint – KSA Expansion
Growing Geographic Footprint – KSA Expansion In October 2022, IDH and Biolab signed a joint venture agreement with Izhoor, a company owned by Fawaz Alhokair, to launch a full-fledged pathology diagnostic services provider in Saudi Arabia Deal Structure Deal Specifics The new joint venture will be ow
Slide 62: Strong Leadership & Governance
Strong Leadership & Governance 62 INTEGRATED DIAGNOSTICS HOLDINGS
Slide 63: Governance
Governance A World-Class Board of Directors The majority of members of IDH’s Board of Directors are independent and offer significant experience in the healthcare market, MENA region and investment activities Lord St John of Bletso 1 Prof. Dr. Hend El Sherbini Hussein Choucri 1,2,3 Independent Non-E
Slide 64: Governance
Governance IDH is committed to implementing best practices in corporate governance through the expertise of both the individual Directors and outside parties Anti-Bribery and Anti Corruption Internal Audit Procedures While not required to comply with UK Policy (ABAC) Corporate Governance Code, IDH a
Slide 65: Sustainability
Sustainability Founded on the principle of providing quality medical assistance and services to better the lives of individuals and the community at large, IDH views corporate responsibility initiatives as an extension of its core purpose with the aim of improving communities in which it does busine
Slide 66: Appendix
Appendix 66 INTEGRATED DIAGNOSTICS HOLDINGS
Slide 67: IDH Development Story
IDH Development Story Over 40 years of industry experience, complemented by strategic expansion to develop a strong market position across products and geographies. Today IDH has built a scalable platform that is positioned for further strong growth 1979 1990 2008 2011 2012 2013-14 Establishment of
Slide 68: IDH
INTEGRATED DIAGNOSTICS HOLDINGS IDH
Integrated Diagnostics Holdings — 9M 2023 Earnings Presentation on 6ix