Healius Limited · ASX:HLS
Healius — H1 2019 Earnings Presentation
40 slides from Healius's earnings presentation, Feb 15, 2019
Slide 1: 1H 2019 Results
1H 2019 Results Half year ended 31 December 2018 15 February 2019
Slide 2: Our Group
Our Group tihealius thealius.....
Slide 3: A market leading network
A market leading network 19 Total Sites Australia-wide 680 Total Sites coverage 19 2,541 Total sites 212 Total Sites 625 21 34 2,299 2,191 ACCs 61 Total Sitesv 108 Laboratories 197 11 4 Pathology 851 Total Sites 49 7 5 ACT 75 Healius Medical Centres 32 Total Sites 96 61 with Dental sites 750 36 65 5
Slide 4: Our vision
Our vision Healius • New Purpose, Mission and Values OUR PURPOSE OUR MISSION • Underpinned by a new brand and name: ‘Healius’ We are inspired to care for your We share a mission to seek and health and wellbeing at every sustain life-enhancing healthcare stage of life. delivered by people who care. V
Slide 5: Key achievements in 1H 2019
Key achievements in 1H 2019 Medical Centres EBIT up nearly 50% on 2H 2018 lows 48% increase in GPs recruits Gross billing up (average $234/ph in January) Appointment roll-out to 39 MD3 /7 MedTech centres. All moving to single PMS Property expansion in Maroubra with 15 to complete 2H 2019 Ima
Slide 6: A transformation-in-progress
A transformation-in-progress However, near-term results not reflective of the future • Soft market conditions in all divisions in 1H 2019 • Cleared the decks on known legacy matters, addressed Dorevitch / Medical Centres award pay • Medical Centres not yet delivering future state 2H 2019 increase in
Slide 7: Group results
Group results 1 2 Group Underlying Reported $m 1H 2019 1H 2018 1H 2019 1H 2018 Revenue 870.6 832.7 871.6 832.7 EBIT 73.1 81.3 51.4 61.6 NPAT 39.4 44.0 20.7 22.1 • Underlying EBIT: o Double-digit growth in Imaging and a good performance in Medical Centres partially offset the decline in Pathology wit
Slide 8: Underlying results
Underlying results 1H 2019 Restructuring & $m Reported strategic initiatives Non-recurring items Underlying EBIT 51.4 21.7 0.0 73.1 Finance costs (16.8) (16.8) PBT 34.6 56.3 “In terms of the strategic initiatives, Income Tax (13.9) (16.9) we have several major projects underway. While spanning more
Slide 9: Free cash flow
Free cash flow 100 (15) 92 (21) $m 50 92 (30) 56 26 0 Gross OCF Interest Tax OCF Maintenance capex Free cash flow • OCF of $55.6m (1H 2018 $105.2m). EBITDA decline, plus: o $14m back pay for the Medical Centres modern awards adjustment and Dorevitch pay determination. Both fully provided in FY18 o $
Slide 10: Net debt
Net debt Reported As at $m 31 Dec 2018 30 June 2018 Total debt 757.5 860.8 Cash (105.1) (84.0) Net debt 652.4 776.8 1 Bank gearing ratio (covenant <3.5x) 2.4x 2.7x Bank interest ratio (covenant >3.0x) 9.2x 9.0x Gearing (net debt: net debt + equity) 24.1% 29.9% Net debt reduction • Significant improv
Slide 11: Divisional Results and Strategies
Divisional Results and Strategies
Slide 12: Pathology - results
Pathology - results Underlying 1H 2019 1H 2018 Better/ $m $m (worse) % Revenue 551.5 534.0 3.3 EBITDA 59.0 67.0 (11.9) Depreciation (10.0) (9.7) (3.1) Amortisation (3.8) (4.4) 13.6 EBIT 45.2 52.9 (14.6) Total capital expenditure 16.7 7.9 n.a. • Revenue: o Soft volume growth (2.1% overall) due to ext
Slide 13: Pathology - strategy
Pathology - strategy • Optimise portfolio of ACCs and laboratories – closure of ACCs during the period • SWA contracts signed = upgrade in testing capabilities • Core LIS platform development. Final stages of negotiation LIS / SWA benefits Brand and reputation - attract and retain best pathologists
Slide 14: Medical Centres - overview
Medical Centres - overview 96 sites nation-wide 75 Healius Medical Centres 61 with Dental sites Unrivalled footprint of large scale centres 5 with Day Hospitals Unprecedented patient flow opportunities 4 with IVF clinics 13 Health & Co 8 Montserrat Day Hospitals Underlying EBIT 1H 2019 2H 2018 1H 20
Slide 15: Medical Centres - results
Medical Centres - results Underlying 1H 2019 1H 2018 Better/ $m $m (worse) % 1 Revenue 149.6 140.9 6.2 1 EBITDA 29.6 30.7 (3.6) Depreciation (9.9) (8.7) (13.8) Amortisation (1.8) (2.5) 28.0 EBIT 17.9 19.5 (8.2) HCP capital expenditure 15.5 16.1 3.7 2 Total capital expenditure 46.0 38.0 (21.1) • Resu
Slide 16: Emerging businesses
Emerging businesses Dental • Dental in 61 Medical Centres • Strong recruitment with 153 Dentists, 130 FTEs • Revenue up 5.4% to $17.5m. EBIT up 14.8% to $3.1m IVF • Investment in disruptive business model with great potential • Perth centre opened at Craigie WA • Move to new Greensborough facility i
Slide 17: Day Hospitals
Day Hospitals Higher growth in same-day separations Healius Day Hospitals • $6.3m revenue, small EBIT loss largely due to greenfield investment • IVF volumes supporting Sydney, Melbourne & Perth Day Hospitals 6.6 7 5.4 (millions) Montserrat acquisition 4.4 4.2 5 3.9 • 2 months of trading in line, 2
Slide 18: Medical Centres – strategy
Medical Centres – strategy Comprehensive renewal of the operating model under Leapfrog People • Strong FTEs pipeline 2H 2019: o 22 FTEs recruited in Jan (32 GPs) o 50+ with contracts signed and 10+ terms agreed o All sites scheduled for Leapfrog renewal included in pipeline Process • Roll-out of app
Slide 19: Imaging - results
Imaging - results Underlying 1H 2019 1H 2018 Better/ $m $m (worse) % 1 Revenue 192.0 176.6 8.7 1 EBITDA 26.4 26.0 1.5 Depreciation (6.7) (7.0) 4.3 Amortisation (1.2) (2.6) 53.8 EBIT 18.5 16.4 12.8 HCP capital expenditure 0.1 1.5 93.3 Total capital expenditure 11.4 10.4 (9.6) • Winning of ADF Health
Slide 20: Imaging - strategies
Imaging - strategies • Rebrand of the division as it continues on its transformative pathway • Revitalisation of community sites with focus on consumer value proposition • Strengthened senior operational capabilities. Focus on labour and operating cost optimisation through standardising best-practic
Slide 21: Corporate
Corporate Underlying 1H 2019 1H 2018 Better/ $m $m (worse) % EBITDA (6.2) (5.5) (12.7) Depreciation (1.5) (1.3) (15.4) Amortisation (0.8) (0.7) (14.3) EBIT (8.5) (7.5) (13.3) • 1H 2019 increased group IT investment and insurance premiums • Modernisation of support functions to deliver best-in-class
Slide 22: FY 2019 Forecast
FY 2019 Forecast Underlying NPAT for FY 2019 expected to be between $93m and $98m • 1H 2019 result below normal run-rate with soft market conditions, in part due to benign Winter flu season • Modest recovery evidenced in October and November but inconsistent thereafter • Expected to improve througho
Slide 23: Appendices Healius group
Appendices Healius group tihealius
Slide 24: Pathology
Pathology No. 1 or 2 in each state • 2nd largest national pathology provider; market leader in QLD, VIC & WA • 1 in 3 pathology samples tested • ~250 specialist pathologists, ~2,300 lab team of scientists and phlebotomists, ~3,800 collectors, ~800 couriers, ~900 support staff • $1bn+ in revenue p/a
Slide 25: Medical Centres
Medical Centres No. 1 national provider of large-scale medical centres Healius Medical Centres • Multidisciplinary teams of GPs, allied health practitioners and specialists address both acute and chronic conditions • Focused on quality and value for patients and preventing hospitalisations • Open 36
Slide 26: Diagnostic Imaging
Diagnostic Imaging No. 3 national imaging provider • Network of 146 imaging sites: o 28 hospitals o 63 community centres o 55 medical centres • $350m+ in revenue p.a. (1H19: $192m) • 3 million examinations annually • Full suite of modalities including X-ray, MRI, PET, CT and ultrasound PEOPLE PROCES
Slide 27: Initiatives across the group
Initiatives across the group PEOPLE PROCESS PROPERTY workplace of choice organisational efficiency yield optimisation GROUP Purpose, Mission and Values Modernisation of corporate support services Outsourced facilities management / leasing Performance management framework infrastructure Pro
Slide 28: Industry trends
Industry trends based on latest MBS data available from October 2018 Pathology: Market Services & Benefits Diagnostic Imaging: Market Services & Benefits 12% 10% 9% 10% 8% 8% 5 year growth rate of 6.2% 7% 5 year growth rate of 4.1% 6% 6% 5% 4% 4% 2% 3% 2% 0% 1% -2% 0% Oct 13 Apr 14 Oct 14 Apr 15 Oct
Slide 29: Appendices Reconciliations
Appendices Reconciliations
Slide 30: Divisional reconciliation
Divisional reconciliation Underlying EBIT 1H 2019 1 2 Pathology Medical Centres Imaging Corporate Group $m Revenue 551.5 149.6 192.0 0.0 870.6 EBITDA 59.0 29.6 26.4 (6.2) 108.8 Depreciation (10.0) (9.9) (6.7) (1.5) (28.1) Amortisation (3.8) (1.8) (1.2) (0.8) (7.6) EBIT 45.2 17.9 18.5 (8.5) 73.1 1H 2
Slide 31: EBIT BAU
EBIT BAU Underlying 1H 2019 1H 2018 Better/ $m $m (worse) % EBIT 73.1 81.3 (10.1) New centres 7.7 5.8 EBIT Business as Usual 80.8 87.1 (7.2) • 1H 2019 underlying EBIT carries $7.7m of investment in the new sites which are still in ramp-up1 • Health & Co now profit making and no longer included FY 20
Slide 32: Accounting change AASB 15
Accounting change AASB 15 • Healius has adopted AASB 15 effective from 1 July 2018 • AASB 15 establishes a single model for entities to use in accounting for revenue from contracts with customers. • Under AASB 15 consideration payable to a customer is accounted for as a reduction to the transaction
Slide 33: Accounting change AASB 15
Accounting change AASB 15 Group reconciliation 1H 2019 1 2 Pathology Medical Centres Imaging Corporate Group AASB 15 Impact, $m Pre AASB 15 Revenue 551.5 167.6 194.1 0.0 890.7 Pre AASB 15 EBITDA 59.0 47.6 28.5 (6.2) 128.9 Amortisation Reclass 0.0 (18.0) (2.1) 0.0 (20.1) Post AASB 15 Revenue 551.5 14
Slide 34: Appendices Medical Centres
Appendices Medical Centres Additional Information
Slide 35: Healius Medical Centres GPs
Healius Medical Centres GPs Recruitment 110 40 35 60 30 GP capex ($m) 25 # of GPs 10 1H15 2H15 1H16 2H16 1H17 2H17 1H18 2H18 1H19 20 15 (40) 10 HLS initiatives essential (90) for future growth 5 Joiners (LHS axis) Leavers (LHS axis) HLS initiatives After-tax capex (RHS axis)-1 Numbers • Record 99 GP
Slide 36: Healius Medical Centres GPs
Healius Medical Centres GPs Key Drivers1 GPs 1H 2019 2H 2018 1H 2018 1H 2017 1H 2016 Headcount 1,066 1,056 1,055 979 955 2 FTEs 925 945 958 922 923 Gross billings ($m) 208.9 212.9 212.2 206.5 207.5 Share of revenue (%) 38.3% 39.4% 41.3% 44.9% 47.3% 3 Revenue ($m) 80.0 83.8 87.7 92.7 98.0 GP capital
Slide 37: Healius Medical Centres GPs
Healius Medical Centres GPs Impact of AASB 15 “Revenue from Contracts with Customers” on GP revenue AASB 15 Impact, $m 1H 2019 2H 2018 1H 2018 1H 2017 1H 2016 Pre AASB 15 Revenue 80.0 83.8 87.7 92.7 98.0 Amortisation Reclass (16.3) (17.9) (19.6) (24.2) (23.3) Post AASB 15 Revenue 63.7 65.9 68.1 68.4
Slide 38: Healius Medical Centres HCPs
Healius Medical Centres HCPs Tax Implications of HCP acquisitions Healthcare Professionals contracted on or after 1 July 2015 • Deferred tax liability (DTL) to be recognised at the time of the acquisition of healthcare practices and capitalisation of contractual relationship intangible assets. • Equ
Slide 39: 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 40: tinhealius
tinhealius