Life Healthcare Group Holdings Limited · JSE:LHC

Life Healthcare — FY2020 Earnings Presentation

54 slides from Life Healthcare's earnings presentation, Nov 19, 2020

  1. Slide 1: Reviewed Preliminary Group Results for the Year Ended 30 September 2020

    REVIEWED PRELIMINARY GROUP RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2020

  2. Slide 2: Group Overview: Year of Two Halves

    2 GROUP OVERVIEW YEAR OF TWO HALVES Revenue of R25.4 billion COVID-19 estimated financial Excellent quality scores impact of R2.7 billion Normalised EBITDA in southern Africa and on revenue and R2.1 billion pre-IFRS16 of R4.1 billion International on normalised EBITDA Successfully implemented operat

  3. Slide 3: Operational Delivery within COVID-19 Environment

    3 FY2020 | GROUP OVERVIEW OPERATIONAL DELIVERY WITHIN COVID-19 ENVIRONMENT  SA business significantly impacted by the COVID-19 pandemic in H2 2020  Good traction on business optimisation initiatives, delivering R125 million even though impacted by cyber incident Southern Africa  Resilient healthc

  4. Slide 4: Five Key Objectives for FY2020

    4 FY2020 | GROUP OVERVIEW FIVE KEY OBJECTIVES FOR FY2020 Objective Achievement  Maintain margins in SA  Margins impacted by COVID-19 but achieved Operational efficiency  Margin improvement in PET-CT wave 1 in the UK objectives in H1  Preston re-opened in March 2020 Stabilise UK  Get 4th cyclotr

  5. Slide 5: COVID-19 Estimated Financial Impact

    5 FY2020 | GROUP OVERVIEW COVID-19 ESTIMATED FINANCIAL IMPACT SAFEGUARD FINANCIAL POSITION STRENGTH AND FLEXIBILITY Group Southern Africa International Revenue R2 710 million COVID-19 Revenue R2 273 million Revenue R428 million EBITDA R2 077 million impact EBITDA R1 786 million EBITDA R291 million E

  6. Slide 6: Operational Review: Southern Africa

    OPERATIONAL REVIEW SOUTHERN AFRICA ADAM PYLE| CEO - SA

  7. Slide 7: COVID-19 Impact

    7 FY2020 | SOUTHERN AFRICA COVID-19 IMPACT COVID-19 PPDs Number of COVID-19 positive patients hospitalised Lockdown Level 5 4 3 3 2 2 1 55 339 1658 1483 1563 1349 39 338 1330 1252 1039 1004 1138 915 21 087 861 895 15 079 783 724 5 352 657 587 1 667 459 454 319 326292 273 Apr May Jun Jul Aug Sep 259

  8. Slide 8: COVID-19 Impact: Mortality and Infections

    8 FY2020 | SOUTHERN AFRICA COVID-19 IMPACT LHC COVID-19 in-hospital mortality rate by age group COVID-19 in-hospital mortality rate by province 30 26 34.0 20 18 26.0 18 20 19 20 21.0 17 19.0 15 13 13 13 12 12 13 11 11 10 7 8.0 1.2 <40 40-49 50-59 60-69 70-79 80+ WC EC GTN KZN NW FS MP % Admissions %

  9. Slide 9: COVID-19 Impact by Province

    9 FY2020 | SOUTHERN AFRICA COVID-19 IMPACT % of COVID-19 PPDs for LHC hospitals by province 60  COVID-19 pandemic peaked at different times across South Africa’s provinces 50 40  In May 2020, 70% of LHC COVID-19 PPDs were in Western Cape and Eastern Cape which represents 25% of LHC beds 30 20  Th

  10. Slide 10: COVID-19 Impact: Acute Business

    10 FY2020 | SOUTHERN AFRICA COVID-19 IMPACT: ACUTE BUSINESS Apr 2020 vs Apr 2019 Sep 2020 vs Sep 2019 Acute: H2 2020 vs H2 2019 SA revenue (36.6%) (5.1%) Acute PPDs Theatre minutes Theatre cases Cathlab cases Total PPDs (43%) (23%) (39.3%) (53%) Occupancy Apr 2019: 68.9% Sept 2019: 68.2% Acute reven

  11. Slide 11: COVID-19 Impact: Complementary Business & Life Esidimeni

    11 FY2020 | SOUTHERN AFRICA COVID-19 IMPACT: COMPLEMENTARY BUSINESS & LIFE ESIDIMENI Apr 2020 vs Sep 2020 vs Complementary: H2 2020 vs H2 2019 Apr 2019 Sep 2019 MH PPDs AR PPDs RD Treatments Onco treatments Complementary revenue (12.1%) (2.2%) +8% Mental health PPDs (44%) (13%) Acute rehabilitation

  12. Slide 12: Southern Africa Business Overview

    12 FY2020 | SOUTHERN AFRICA BUSINESS OVERVIEW Acute hospitals Complementary services Healthcare services Revenue R’m Proportion of R14 821 million R1 078 million R1 346 million Four-year CAGR 3.2% SA revenue 86.0% 6.2% 7.8% 49 acute 14 000 admissions 10 PPP* 1 259 hospitals 211 144 PPDs facilities 1

  13. Slide 13: Business Review: Challenging Year on Back of COVID-19

    13 FY2020 | SOUTHERN AFRICA BUSINESS REVIEW: CHALLENGING YEAR ON BACK OF COVID-19 PANDEMIC %  Revenue and activity comparison: 2020 2019 change Feb 20 Sept 20 PPD growth (15.7%) 0.8% PPD growth 2.0% (15.7%) Revenue growth 7.4% (6.6%) Revenue (R’m) 17 245 18 472 (6.6)  8.9% growth in revenue per PP

  14. Slide 14: Business Review: Operational Trends

    14 FY2020 | SOUTHERN AFRICA BUSINESS REVIEW: OPERATIONAL TRENDS Revenue growth rate: 2019-2020 PPD growth rate: 2019-2020 6.3% 0.2% (6.6%) (15.7%) (18.5%) (30.5%) H1 H2 FY H1 H2 FY Normalised EBITDA margin: 2019-2020 Occupancy (%) 73 67 67 (0.4%) 64 58 58 (7.3%) 55 49 50 (15.8%) H1 2020 H2 2020 2020

  15. Slide 15: COVID-19 Impact: Recovery

    15 FY2020 | SOUTHERN AFRICA COVID-19 IMPACT: RECOVERY Monthly change in PPDs PPDs as a % vs 2019 34 253 25 614 16 237 19 081 19 943 84 80 79 7 738 75 70 (5 179) (5 671) 60 (8 263) (18 016) (16 001) (24 260) Jul Aug Sept Oct COVID-19 PPDs Non-COVID-19 PPDs Net change Sept Oct Surgical Medical Medical

  16. Slide 16: COVID-19 Impact: Recovery

    16 FY2020 | SOUTHERN AFRICA COVID-19 IMPACT: RECOVERY Occupancy (%)  Continued improvement in occupancy: − 17 November: 60% 69 63 57 58  Revenue vs PY: 52 53 − September: (6.7%) − October: (8.6%) Sept Oct (revenue in October increased by 8.2% over September) Acute Complementary Total − 17 November

  17. Slide 17: Continued Focus on Quality Outcomes and Patient Experience

    17 FY2020 | SOUTHERN AFRICA CONTINUED FOCUS ON QUALITY OUTCOMES AND PATIENT EXPERIENCE 2020 2019 Change Measure Patient experience Definitely recommend 70.8 70.7  percentage Patient experience 8.39 8.4  Patient quality and safety measures  Excellent quality results HAI (healthcare associated infe

  18. Slide 18: Healthcare Services: Revenue and EBITDA

    18 FY2020 | SOUTHERN AFRICA HEALTHCARE SERVICES: REVENUE AND EBITDA Revenue (R’m) EBITDA (R’m) EBITDA margin Life Esidimeni +6.9% 11.8% 10.0% 148  Good revenue growth driven by stable PPDs 1 346 and improved tariffs 1 259 135  EBITDA margins declined due to increased costs associated with COVID-19

  19. Slide 19: Operational Review: International

    OPERATIONAL REVIEW INTERNATIONAL MARK CHAPMAN| CEO - INTERNATIONAL

  20. Slide 20: Overview: Alliance Medical

    20 FY2020 | INTERNATIONAL OVERVIEW – ALLIANCE MEDICAL United Kingdom (UK) Italy Ireland Other geographies  DI static sites 29 Spain Netherlands Germany Finland  PET-CT national  Owned clinics 34 contract sites 36  Static sites 8  Operating sites 28  Mobiles 53  Cyclotron site 1 Estonia Norway

  21. Slide 21: COVID-19 Response

    21 FY2020 | INTERNATIONAL COVID-19 RESPONSE Resilient diagnostic business  Impacted through hard lockdowns in wave 1  Good bounce back with a V-shape recovery in most territories  PET-CT and radiopharmacy more resilient than MRI and CT  Impact of wave 2 a concern but resilience of Imaging busine

  22. Slide 22: Strong Recovery in Scan Volumes in Q4: Alliance Medical

    22 FY2020 | INTERNATIONAL STRONG RECOVERY IN SCAN VOLUMES SEEN IN Q4: ALLIANCE MEDICAL Diagnostic Imaging scans PET-CT scans Total monthly volumes UK Italy Ireland Other UK 2019 2020 2019 2020 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep 2020 2019 UK Italy Ireland Other UK Q4 2019 Q4 2020 Q4 2019

  23. Slide 23: Patient Volumes Declined Sharply but Have Recovered Well

    23 FY2020 | INTERNATIONAL PATIENT VOLUMES DECLINED SHARPLY INITIALLY BUT HAVE RECOVERED WELL: ALLIANCE MEDICAL UK Ireland 6 000 8 000 5 000 7 000 4 000 DI 6 000 70% 60% 5 000 3 000 4 000 2 000 3 000 2 000 1 000 PET-CT 1 000 - - 09-Feb 09-Mar 09-Apr 09-May 09-Jun 09-Jul 09-Aug 09-Sep 09-Oct 09-Feb 09

  24. Slide 24: Scan Volumes Have Followed the Expected Recovery Path

    24 FY2020 | INTERNATIONAL SCAN VOLUMES HAVE FOLLOWED THE EXPECTED RECOVERY PATH: ALLIANCE MEDICAL Crisis management COVID-19 operations Recovery strategy Implemented new state of Activity growth to pre-COVID-19 Regions adapted at pace to operational delivery. levels, new WoW, growth understand and a

  25. Slide 25: Estimated COVID-19 Impact: Alliance Medical

    25 FY2020 | INTERNATIONAL ESTIMATED COVID-19 IMPACT: ALLIANCE MEDICAL FY2021  Reduction in volumes was across all business units and throughout the period March to September, with 80% of the reduction in the period to June 2020 Revenue* £m 19.0  In Q4 volumes in some regions, most notably within I

  26. Slide 26: Stable Overall Performance: Alliance Medical

    26 FY2020 | INTERNATIONAL STABLE OVERALL PERFORMANCE: ALLIANCE MEDICAL %  Excluding impact of COVID-19 2020 2019 change - Good revenue growth compared to 2019 mostly driven by: Revenue (£’m) 304.0 304.4 (0.4) − Strong growth in PET-CT scan Business as usual (£’m) 323.7 304.4 6.0 volumes in the UK −

  27. Slide 27: United Kingdom: Alliance Medical

    27 FY2020 | INTERNATIONAL UNITED KINGDOM (UK): ALLIANCE MEDICAL MI as a % of UK revenue Molecular imaging (MI)  PET-CT wave 1 − MI growth underpinned by 10-year PET-CT 47% 51% 49% 41% wave 1 contract 2017 2018 2019 2020 − Pricing certainty until December 2025 PET-CT wave 1 volumes  PET-CT wave 2 C

  28. Slide 28: Future Proofing UK Radiopharmacy

    28 FY2020 | INTERNATIONAL FUTURE PROOFING UK RADIOPHARMACY: ALLIANCE MEDICAL  With strong growth in PET-CT, the planned 350 000 8 refurbishment has resulted in operational 300 000 7 Number of doses per year challenges while the business operated 250 000 6 Number of RP sites three of the four cyclot

  29. Slide 29: UK: Growth in Longer-Term Contracts

    29 FY2020 | INTERNATIONAL UK: ALLIANCE MEDICAL Growth in longer-term contracts Diagnostic imaging (DI) Long Term Short Term  Strategic focus continues to be on long-term 44 41 36 47 partnership solutions with hospital trusts  UK DI volumes up c.7% (February YTD) excluding the 56 59 64 53 impact of

  30. Slide 30: Italy and Ireland

    30 FY2020 | INTERNATIONAL ITALY AND IRELAND  Revenue down 8.8% as a result of COVID-19 impact from March 2020  8.4% growth in Q4 from diagnostic scanning volume versus Q4 2019 (18.1% including lab activity)  Focus on maximising the allocated ASL budget by December 2020 to capture reduced volumes

  31. Slide 31: Strong Performance: Poland

    31 FY2020 | INTERNATIONAL STRONG PERFORMANCE: POLAND  The Group suspended the process of potentially disposing of Scanmed in H1 FY2020 due to  Good revenue growth driven by: the uncertainty and market volatility brought on by the COVID-19 pandemic − Price increases for public-  The Group is in ne

  32. Slide 32: Quality Outcomes: Alliance Medical

    32 FY2020 | INTERNATIONAL QUALITY OUTCOMES: ALLIANCE MEDICAL FY2020 Year-on-year Clinical quality indicator FY2020 FY2019 FY2018 against Target trend Target UK Patient experience (satisfied and very satisfied) 97.3% 95.3% 94.4%  >92.5% Friends and family score 95.7% 94.9% 94.5%  >92.5% Written pat

  33. Slide 33: Operational Review: Growth Initiatives

    OPERATIONAL REVIEW GROWTH INITIATIVES PETER WHARTON-HOOD | GROUP CHIEF EXECUTIVE

  34. Slide 34: SA Imaging Opportunity and Outpatient Care

    34 FY2020 | GROWTH INITIATIVES SA imaging opportunity Outpatient care  Timing of implementation impacted by COVID-19  Six myLife clinics set up of which four are in partnership with Pick n Pay  Good progress has been made regarding the development of the imaging opportunity  Rapid delivery of di

  35. Slide 35: LMI

    35 FY2020 | GROWTH INITIATIVES LMI  Positive EBITDA realised within two years of acquisition  Focus on driving sales of Neuraceq  NeuraceqTM and other amyloid beta targeting ET biomarkers obtained reimbursement by Switzerland starting April 2020  NeuraceqTM sales down initially by c70% due to CO

  36. Slide 36: Financial Review

    FINANCIAL REVIEW PIETER VAN DER WESTHUIZEN | GROUP CFO

  37. Slide 37: Summary

    37 SUMMARY Reported revenue Normalised EPS -1.1% Cash generated from Reported normalised EBITDA operations more than -47.6% pre-IFRS16 R4.5 billion to 61.0 cps -28.4% Estimated negative Negotiated covenant Strong financial position impact of amendment to 31 March and undrawn facilities of COVID-19 o

  38. Slide 38: Financial Statutory Results

    38 FINANCIAL STATUTORY RESULTS GROUP 2020 2019 %  Normalised EBITDA impacted by: R’m R’m change − IFRS 16 Leases; (+R248 million) Revenue 25 386 25 672 (1.1) − COVID-19 pandemic (-R2.1 billon) Normalised EBITDA 4 346 5 727 (24.1)  Non-operating (expenses)/income Normalised EBITDA margin (%) 17.1 2

  39. Slide 39: Financial Underlying Results

    39 FINANCIAL UNDERLYING RESULTS GROUP 2020 2020 2020 2020 As IFRS 16 Estimated Underlying reported impact COVID-19 impact results¹ 2019 % R’m R’m R’m R’m R’m change Revenue 25 386 - 2 710 28 096 25 672 9.4 Normalised EBITDA 4 346 (248) 2 077 6 175 5 727 7.8 Normalised EBITDA margin (%) 17.1 (0.9) 5.

  40. Slide 40: Impact of IFRS 16 Leases and COVID-19

    40 IMPACT OF IFRS 16 LEASES AND COVID-19 GROUP 2020 2020 2020 2020 IFRS 16 Estimated Underlying As reported impact COVID-19 impact results¹ 2019 %  Reported results impacted by: R’m R’m R’m R’m R’m change − Additional ECL provision of Revenue 25 386 - 2 710 28 096 25 672 9.4 R167 million Southern A

  41. Slide 41: Financial Results

    41 FINANCIAL RESULTS GROUP 2020 Normalised EBITDA margin (%) Constant Pre-IFRS 16 2019 currency % R’m R’m % 5.8 0.5 Revenue (4.5) 25 386 25 672 (1.1) 0.9 Southern Africa (6.6) 17 245 18 472 (6.6) 22.0 22.0 22.5 22.3 International 1.1 7 821 6 931 12.8 17.1 16.2 16.2 16.2 Growth initiatives¹ 6.6 320 2

  42. Slide 42: Financial Results: EPS and HEPS

    42 FINANCIAL RESULTS GROUP 2020 2019 %change Weighted average number of shares (million) 1 455 1 456 (0.1)  Includes the impact of IFRS 16  Earnings negatively impacted by EPS (cents) -6.4 176.4 >(100) R1.4 billion (-97.0 cps) due to the Impairment of assets and investments 54.9 9.6 COVID-19 pande

  43. Slide 43: Consolidated Condensed Statement of Financial Position

    43 CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION GROUP 2020 2019  Strong financial position R’m R’m  Successful refinance of international Non-current assets 35 328 31 588 debt in March 2020. Reducing interest Property, plant and equipment 15 361 12 929 rate by approx. 50bps and extending

  44. Slide 44: Cash Flow

    44 CASH FLOW GROUP 2020 2019 % R’m R’m change Cash generated from operations 4 562 5 927 (23.0) R’m Transaction costs paid (17) (147) 111% Net interest paid (730) (924) 103% 99% Tax paid (597) (1 185) 95% 93% 93% Maintenance capex (1 205) (1 166) Minority distributions (196) (238) Staff schemes (44)

  45. Slide 45: Debt

    45 DEBT 2020 2020 Weighted avg. 2019 2019 Weighted avg. cost Funding Local currency ’m R’m cost of debt Local currency ‘m R’m of debt (post-tax) (post-tax) Acquisition funding ZAR 500 500 4.41 650 650 6.99 PLN 93 407 2.26 95 362 3.76 GBP 139 3 037 1.80 139 2 598 2.44 Capex funding - ZAR 2 522 2 522

  46. Slide 46: Debt Repayment Profile

    46 DEBT REPAYMENT PROFILE Balance at Maturing in Maturing in Maturing in Maturing in R’m 30 Sep 2020 FY2021* Maturing in FY2022 FY2023 FY2024 FY2025 or later Bank Debt 11 310 (1 641) (1 979) (3 929) (1) (3 760) Lease liabilities 2 904 (539) (457) (586) (277) (1 045) Total debt 14 214 (2 180) (2 436)

  47. Slide 47: 2021 Outlook

    2021 OUTLOOK PETER WHARTON-HOOD| GROUP CHIEF EXECUTIVE

  48. Slide 48: FY2021 Outlook

    48 FY2021 | OUTLOOK  Level and duration of COVID-19 pandemic remains uncertain  Uncertain environment expected to continue in 2021 COVID-19  Focus remains on treating our patients and looking after our employees, doctors and other healthcare professionals  Ensure appropriate capital and operatio

  49. Slide 49: Our Vision: Adapting Our Strategy for the New Environment

    49 OUR VISION ADAPTING OUR STRATEGY FOR THE NEW ENVIRONMENT Global healthcare provider Continue to grow our businesses whilst GROWTH offering an integrated healthcare diversifying our sources of revenue 1 model and diagnostic imaging capability Deliver cost-effective care through our employees, clin

  50. Slide 50: Appendix

    2020 #flattenthecurve #strongertogether Wash your hands Keep 2m apart Zero Excuses for 20 seconds #socialdistancing Wear a mask with soap and water Practice hand hygiene Keep your distance Adhere to lockdown regulations Life. ...., HEALTH J CARE APPENDIX 2020 YEAR OF THE NURSE

  51. Slide 51: Group Overview: Risk, Cash Preservation, Financial Resilience

    51 FY2020| GROUP OVERVIEW Managing uncertainties and risk Cash preservation measures Financial resilience  The impact of the economic environment  Delayed capex projects without  Raising additional bank facilities – on the membership of medical schemes is compromising the business increasing faci

  52. Slide 52: Progress on Diversifying Across Business Lines and Territories

    52 FY2020| GROUP OVERVIEW CONTINUED PROGRESS MADE ON THE IMPLEMENTATION OF DIVERSIFYING ACROSS BUSINESS LINES AND TERRITORIES Acute versus Revenue (%) EBITDA (%) non-acute revenue (%) 21% 18% 22% 20% 26% 29% 24% 32% 32% 31% 33% 37% 79% 82% 78% 80% 74% 71% 76% 68% 68% 69% 67% 63% 2017 2018 2019 2020

  53. Slide 53: Financial Underlying Results: H1

    53 FINANCIAL UNDERLYING RESULTS GROUP: H1 2020 2020 2020 2020 As IFRS 16 Estimated Underlying reported impact COVID-19 impact results¹ 2019 % R’m R’m R’m R’m R’m change Revenue 13 244 - 264 13 508 12 399 8.9 Normalised EBITDA 2 923 (117) 166 2 972 2 733 8.7 Normalised EBITDA margin (%) 22.1 (0.9) 0.

  54. Slide 54: Financial Underlying Results: H2

    54 FINANCIAL UNDERLYING RESULTS GROUP: H2 2020 2020 2020 2020 As IFRS 16 Estimated Underlying reported impact COVID-19 impact results¹ 2019 % R’m R’m R’m R’m R’m change Revenue 12 142 - 2 446 14 588 13 273 9.9 Normalised EBITDA 1 423 (131) 1 911 3 203 2 994 7.0 Normalised EBITDA margin (%) 11.7 (0.9

Life Healthcare Group Holdings — FY2020 Earnings Presentation on 6ix