Mlp Saglik Hizmetleri As Class B · BIST:MPARK
Mlp Saglik Hizmetleri As Class B — MLP Care — Non-Deal Roadshow (October 2018)
41 slides from Mlp Saglik Hizmetleri As Class B's roadshow presentation, Oct 1, 2018
Slide 1: GS Non-deal Roadshow, Abu Dhabi - Dubai
GS Non-deal Roadshow, Abu Dhabi - Dubai October 1, 2018
Slide 2: MLP Care: The #1 Private Hospital Group in Turkey
MLP Care: The #1 Private Hospital Group in Turkey 17 Cities 31 Hospitals; 5.900+ Beds; More than the #2 2x the size of 2nd Largest 17.500+ Staff and #3 Competitors Combined Competitor 2.100+ Doctors Addresses All Price Segments 3 JCI Accredited Hospitals Revenues:2.6 billion TL 1 in the Turkish Mark
Slide 3: Strategic Priorities
Strategic Priorities Our strategic priorities are in line with the Demand-Driven Healthcare System Demand Employee Centric PERFORMANCE BASED ORGANIZATION • Revenue Group • Costs Group • Patient Satisfaction Group • Revenue, Invoicing and System Trust Centric Patient Centric Demand Centric Driven Col
Slide 4: Content
Content 1. Recent Developments & Outlook • Regulatory changes, operational and financial updates • Outlook & Prospects 2. Why Invest in MLP Care? • Operates in the Attractive Turkish Healthcare Market • Clear Leader in Private Healthcare Provision • Strong Brand Recognition and Unique Business Model
Slide 5: 1. Recent Developments & Outlook
1. Recent Developments & Outlook • Regulatory Changes • Positive effects of the amendment of SUT prices • Operational Updates • Two new openings: Pendik and Mersin were completed on budget and schedule • Medical tourism and top-up continued to post high growth • Financial Updates • Revenue and compa
Slide 6: Regulatory Changes
Regulatory Changes SUT price amendments have positive impact on our numbers As of July 5, 2018, Healthcare Applications Complex surgeries in private sector 1 Comminuque of the Social Security Institution («SUT») prices are amended. 48% 36% 19% • The prices of inpatient procedures especially 17% 16
Slide 7: Operational Update: Two new hospitals
Operational Update Two new hospitals added to our hospital network Pendik Mersin Location İstanbul Mersin Opening Date March 2018 May 2018 Key Statistics 62,000 m2 35,000 m2 New hospitals were opened on budget and schedule The ramp up of the hospitals is in accordance with the plan 7
Slide 8: Operational Update: Medical tourism and top-up growth
Operational Update Medical tourism and top-up continued to post high growth 31% 63% Other 8% Revenue from PMI, Top-up & Contracted (1%) Institutions grew by 6x in the last five years Medical Tourism 9% Top-up Insurance continue to lead the SSI 30% growth (96% growth in H1 2018) PMI, Top-up Med
Slide 9: Medical tourism revenue grew above 60% in H1 2018
Operational Update Medical tourism revenue grew above 60% in H1 2018 One of the top medical tourism service providers Medical Tourism Revenue 2 in Turkey Volume & Price (TLm) 1 19.3% 44.2% 15 Istanbul is one of the top destinations for medical 125 tourism (MLP Care has 10 hospitals in Istanbul)
Slide 10: MLP Care benefits from fast growth of Top-up Insurance Market
Operational Update MLP Care benefits from the fast growth of Top-up Insurance Market # of People With Insurance (PMI and Top-up) in Turkey – 000s Growth Top-up insurance CAGR (2014-2017) (H1 2017-H1 2018) (since 2014) 2,678 2,703 2,927 Cheaper form of PMI to 2,214 2,281 6.9% 2,478 18.1% cover SSI
Slide 11: Financial Update: Comparable Adj. EBITDA grew by 25%
Financial Update Comparable Adj. EBITDA grew by 25% Revenue (TLm) Adj. EBITDA¹ (TLm) 17.7% 24.9% 19.4% 17.3% 262 1,470 8.4% 250 720 110 2 Q2 2018 H1 2018 Q2 2018 H1 2018 H1 2018 (1) EBITDA has been adjusted for TFRS adjustments that have no cash impact on relevant period and one-off income/expense f
Slide 12: All revenue segments posted strong growth in H1 2018
Financial Update All revenue segments posted strong growth in H1 2018 Domestic Patient Medical Tourism Ancillary Business Revenues Revenues 13.4% 63.5% 30.6% 11.4% 60.2% 48.0% 1,226 125 119 589 66 65 Q2 2018 H1 2018 Q2 2018 H1 2018 Q2 2018 H1 2018 Growth Continued in H1 2018 Continued to attract For
Slide 13: Domestic hospital business revenue up 13.4%
Financial Update Domestic hospital business revenue up 13.4% Outpatient Revenues (TLm) Inpatient Revenues (TLm) 19.0% 9.9% 34.9% 2 2.9% 1 740 15.9% 495 7.0% 145 720 19 730 700 46 (66) 416 680 660 665 640 620 600 H1 2017 Volume Price H1 2018 H1 2017 Volume Price H1 2018 Average Revenue Per Visit (ARP
Slide 14: Adj. EBITDA improves on smart cost management
Financial Update Adj. EBITDA improves on the back of smart cost management and savings Cost of Service and G&A Expenses as a % of Revenues Material costs as a % of revenue declined, Adj. EBITDA Margin 16.8% 17.0% helped by the patient mix impact and decline in share of laboratory services business
Slide 15: FX exposure mitigated by hedging
Financial Update FX exposure mitigated by hedging FX BASED NET DEBT (in EUR m) NET DEBT 204 Before Hedging After Hedging 29% 45% 55% 104 71% 81 Percentage 53 Local Currency Local Currency Hard Currency Hard Currency 2017 Q1 2018 H1 2018 H1 2018 (Before (After Nominal TL957m TL957m Hedging) Hedging)
Slide 16: Net income fully hedged against FX after hedging transaction
Financial Update After the hedging transaction w/o the impact of non-cash FX losses, net income is fully hedged against FX changes Hard After Hard Currency as % of Hedging TLm H1 2018 Currency Total Revenues Transaction Domestic Hospital Revenue 1,226 - - - Foreign Medical Tourism 125 125 9% 9% Anci
Slide 17: Intelligent capex spending during strong headwinds
Financial Update Intelligent capex spending during strong headwinds Maintenance Capex (TLm) Total Capex (TLm) Operating Cash Flow / EBITDA 127.0% 2.9% 12.7% 92.1% 2.8% 11.4% 200,0 43 150,0 266 167 230 35 159 100,0 50,0 - H1 2017 H1 2018 H1 2017 H1 2018 H1 2017 H1 2018 % of Revenue % of Revenue % of
Slide 18: Outlook & Prospects
Outlook & Prospects 2018 is expected to be a challenging environment due to currency volatility and increasing inflation. Our targets are: Operational Increase operational excellence and adjust our targets upwards Enhance patient satisfaction Improve the mix on higher revenue and EBITDA genera
Slide 19: 2. Why Invest in MLP Care?
2. Why Invest in MLP Care? 1 Operates in the Attractive Turkish Healthcare Market 2 Clear Leader in Private Hospital Provision 3 Strong Brand Recognition and Unique Business Model 4 Clinical Excellence and World Class Service Offering 5 Superior Historical Financial Performance 6 Outstanding Platfor
Slide 20: Operates in the Attractive Turkish Healthcare Market
1 Operates in the Attractive Turkish Healthcare Market Turkey is an attractive healthcare market with a growing elderly population and level of affluence, with significant scope for expansion compared to OECD players Turkish Healthcare Spending to Providers1 (TLbn) Growth in Aging Turkish Population
Slide 21: Private operators increased market share
1 Operates in the Attractive Turkish Healthcare Market Private operators have increased their market share, by increasing capacity and by focusing on procedures with higher complexity. Private players now account for 22% of beds, but provide 53% of complex surgeries. Number of Hospital Beds (’000) N
Slide 22: Supportive government policies underpin private hospital expansion
1 Operates in the Attractive Turkish Healthcare Market Supportive government policies have underpinned the expansion of private hospital groups Healthcare system and key participants Universal Healthcare Coverage with Patient Choice Regulation Funding Service Patients Universal healthcare coverage •
Slide 23: Clear Leader in Private Hospital Provision
2 Clear Leader in Private Hospital Provision MLP Care is the largest multi-specialty hospital group in Turkey and the only private player with a truly nationwide network Bed concentration in İstanbul: • MLP: 40% • Acibadem: 67% National and local leader with a network covering • Memorial: 34% • Me
Slide 24: MoH PPP program: no near-term impact expected
2 Clear Leader in Private Hospital Provision MoH is investing in the PPP program, but large private players do not expect to see an impact in the near / mid term Highly illustrative schematic of the Turkish Healthcare Sector PPP success factors Top end of the Private Hospital market City hospitals
Slide 25: Strong Brand Recognition and Unique Business Model
3 Strong Brand Recognition and Unique Business Model Addressing Multiple Price Points Three concepts targeting three different price points with consistently outstanding medical service quality Concept Overview and Positioning 31 Total Hospitals in Portfolio Relative Average Price per Payor Type1 3
Slide 26: Double Digit Growth in Majority of Payor Types
3 Strong Brand Recognition and Unique Business Model Addressing Multiple Price Points Double Digit Growth in Majority of Payor Types 40% 66% Other 7% SSI Insurance provides Access to the majority Medical of Turkey’s population Tourism 7% 6% Revenue from PMI grew by 6x in the last five PMI, Top-u
Slide 27: Clinical Excellence and World Class Service Offering
4 Clinical Excellence and World Class Service Offering MLP Care benefits from a “Virtuous Circle” of best-in-class service, infrastructure and academic affiliations JCI accreditation SRC1 University affiliations The Gold Standard in Healthcare Globally The Global standard for quality surgical care M
Slide 28: Top tier talent and patients attracted to MLP Care
4 Clinical Excellence and World Class Service Offering Top tier talent and patients are attracted to MLP Care’s unrivalled reputation, resulting in a steadily growing market share Ability to attract and retain top-tier physicians… CAGR Key points of attraction Proven track record of physicians recru
Slide 29: Superior Historical Financial Performance
5 Superior Historical Financial Performance EBITDA Growth > Net Sales > CPI (Consumer Price Index) Net Sales (TLm) EBITDA (TLm) %19 %25 CAGR 2014-2017 CAGR 2014-2017 31% 31% 21% 19% 17% 13% 12% 9% 9% 2015 2016 2017 Net Sales Growth EBITDA Growth CPI (Consumer Price Index) 29
Slide 30: Outstanding Platform for Further Growth: ramp-up examples
6 Outstanding Platform for Further Growth Quick and successful ramp up in greenfields as well as acquisitions with typical range of 12-18 months to EBITDA-neutral hospitals Example of Greenfield Example of Acquisition Batıkent (Oct-2014) Yıldızlı (Sep-2014) Total Investment TL50m Total Investment Co
Slide 31: Proven track record of greenfield expansions and M&A
6 Outstanding Platform for Further Growth Proven track record of greenfield expansions and M&A Total Hospitals 25 26 27 29 31 33 35 At Year End MLP Care has added on average c.400 beds p.a.1 Acquired 6 Opened one 2 New Hospitals Two potential Bed Greenfield through greenfield projects since 2014 h
Slide 32: Several avenues to continue growth trajectory
6 Outstanding Platform for Further Growth MLP Care has several avenues to continue its growth trajectory 1 2 Top line growth via the Growth through favourable insurance scheme revenue diversification MLP Care has increased its market share in PMI (private medical insurance) Self-Pay share of tot
Slide 33: 3. Appendix
3. Appendix • Historical Financial Statements • Cost Breakdown - 2017 • Cash Flow Generation - 2017 • Capital, Shareholder Structure* & Subsidiaries • Key Historic Milestones 33
Slide 34: Historical Balance Sheet
Historical Balance Sheet 2016 2017 2018 TLm Dec 31 Dec 31 June 30 Cash and cash equivalents 111 218 372 Trade receivables 724 750 787 Inventory 45 51 75 Short term other assets 136 142 171 Current assets 1,016 1,161 1,404 Fixed assets 1,173 1,220 1,290 Deferred tax assets 146 197 257 Long term other
Slide 35: Historical P&L Statements
Historical P&L Statements TLm FY 2016 H1 2018 FY 2017 H1 2017 Revenue 2,160 2,576 1,248 1,470 Cost of service (-) (1,854) (2,171) (1,055) (1,231) Gross profit 306 405 193 239 General administration expenses (-) (127) (215) (83) (123) Other income from operations 198 380 162 157 Other expenses from o
Slide 36: Reconciliation from Reported EBITDA to Adjusted EBITDA
Reconciliation from Reported EBITDA to Adjusted EBITDA TLm 2016 2017 H1 2017 H1 2018 Net profit / (loss) (49) (133) (20) (8) Tax income from operations (14) (38) (8) (46) Depreciation and amortization of tangible and intangible fixed assets including non- 153 175 84 90 cash provisions related to ass
Slide 37: Cost Breakdown - 2017
Cost Breakdown - 2017 Adjusted EBITDA 14.5% 15.9% Margin 8.7% Material: Slight increase due to 8.1% change in the revenue mix 4.3% 4.2% 7.0% 7.3% Doctor: Flat as doctor cost is ca. 95% variable 20.2% 18.6% Personnel: Decline on the back of operational leverage Rent: New hospital openings and
Slide 38: Cash Flow Generation - 2017
Cash Flow Generation - 2017 Maintenance Capex 1 (TLm) Capex of New Hospitals (TLm) Free Cash Flow (TLm) 63% 73% 2.6% %2.6 2.6% %2.6 % of Sales Remained flat as a percentage of Continued new hospital Strong free cash flow generation revenues at 2.6% investments maintained x% FCF / EBITDA 1 Incl
Slide 39: Capital, Shareholder Structure & Subsidiaries
Capital, Shareholder Structure* & Subsidiaries *Shareholding structure after public offering (excluding the 6,827k shares purchased by shareholders from publicly traded portion) Usta Group – Elbaşı Group Lightyear Hujori Sancak İnşaat (Founders) Healthcare B.V. Financieringen B.V. Turizm Nakliyat •
Slide 40: Key Historic Milestones
Key Historic Milestones • 2 hospitals • 3 hospitals • TURKVEN • 1 hospital • MPARK • Founders Dr. • Dr. Usta, Adem Muharrem Usta Elbaşı and • Carlyle opened in • 1 hospital acquired opened in Stocks acquired 40% opened in 53.35% and Adem Sancak Group İzmir, opened in Samsun starting to stake in MLP
Slide 41: Disclaimer and IR Contact
Disclaimer This presentation may contain certain forward-looking statements concerning MLP Care’s future performance and should be considered as good faith estimates made by the Company. These forward-looking statements reflect management expectations and are based upon currently available data. Act