Healius Limited · ASX:HLS
Healius — FY2017 Earnings Presentation
30 slides from Healius's earnings presentation, August 2017
Slide 1: FY 2017 Results
CLICK FY 2017TO EDIT RESULTS MASTER TITLE STYLE YEAR ENDED 30 JUNE 2017
Slide 2: Group Results
SOMATOM Definition F GROUP RESULTS
Slide 3: Financial Highlights
FINANCIAL HIGHLIGHTS Group Underlying1 Reported $m FY 2017 FY 2016 FY 2017 FY 2016 Revenue 1,658.6 1,618.5 1,658.6 1,641.9 EBIT 174.6 196.3 (469.7) 114.4 NPAT (continuing operations)2 92.1 96.8 (516.9) 38.2 NPAT (including MedicalDirector) 92.1 104.0 (516.9) 74.7 NPAT BaU3 96.9 97.9 - - As at 30 Jun
Slide 4: Self-Funded Growth and Dividend
SELF-FUNDED GROWTH AND DIVIDEND $129m capex split 55:45 maintenance : growth $84m FCF funded dividend and net debt reduction 350 300 92 250 (75) (11) 11 200 212 (44) $m 150 (58) (23) 84 15 100 36 13 50 82 82 82 82 - Opening cash OCF PPE Net HCP Other Net cash after Capital Dividends Net cash after R
Slide 5: Improved Net Debt Position
IMPROVED NET DEBT POSITION Reported As at $m 30 June 2017 30 June 2016 30 June 2015 Total debt 879.7 898.3 1,205.5 Cash (95.5) (82.3) (50.0) Net debt 784.2 816.0 1,155.5 Bank gearing ratio (covenant <3.5x) 2.5x 2.4x 3.0x Bank interest ratio (covenant >3.0x) 7.9x 6.6x 5.9x Gearing (net debt: net debt
Slide 6: Impact of Growth Initiatives
IMPACT OF GROWTH INITIATIVES Underlying FY 2017 FY 2016 Better/ $m $m (worse) % NPAT 92.1 96.8 (4.9) New centres / Health & Co 4.8 1.1 NPAT BaU 96.9 97.9 (1.0) » Underlying performance, before new centres and Health & Co, broadly in-line with FY 2016 ‒ FY 2017 openings: Medical Centres - Corrimal Me
Slide 7: Bridge of Reported to Underlying
BRIDGE OF REPORTED TO UNDERLYING FY 2017 Restructuring & Non-recurring $m Reported Impairment strategic initiatives items Underlying EBIT (469.7) 587.0 39.2 18.1 174.6 Finance costs (43.1) (43.1) PBT (512.8) $644.3m EBIT adjustment 131.5 Income Tax (4.1) (39.4) NPAT (516.9) 92.1 FY 2016 Balance Shee
Slide 8: Divisional Results & Strategy
DIVISIONAL RESULTS & STRATEGY 8 FY17 RESULTS
Slide 9: MCBB: FY 2017 – Change in Metrics
MCBB: FY 2017 – CHANGE IN METRICS FY 2017 FY 2016 1 Better/ Better/ Underlying $m $m (worse) $ (worse) % HCP capital expenditure 30.3 60.6 30.3 50.0 EBITDA less HCP capital expenditure 95.5 92.2 3.3 3.6 Revenue 317.8 328.7 (10.9) (3.3) EBIT 49.6 71.9 (22.3) (31.0) Under new contracts, we have signif
Slide 10: MCBB: GP Key Drivers
MCBB: GP KEY DRIVERS Better/ Better/ (worse) % (worse) % GPs FY 2017 FY 2016 FY 2015 FY16-17 FY15-16 Headcount 1,040 960 923 8.3 4.0 FTEs1 959 920 908 4.2 1.3 Gross billings ($’m) 416.0 417.5 415.8 n/m n/m Share of revenue (%) 42.9% 46.0% 47.6% (310) pp (160) pp GP capital expenditure2 ($’m) 27.4 53
Slide 11: MCBB: GP Recruitment
MCBB: GP RECRUITMENT » Recruitment and retention are critical success factors Quarterly GP recruitment 55 » Record 153 GPs recruited, with momentum increasing » Retention improved to 92% across cohort with 1/3 of leavers’ contracts not renewed 35 38 » Strong pipeline of GPs. Plus record 92 registrar
Slide 12: MCBB: Strategy
MCBB: STRATEGY » HCP and employee engagement – Improve offering to HCPs: recruitment packages, increased support services, nurses, relationship team » Staff engagement activities » Diversification of service offerings EXPANSION INVESTMENT ENGAGEMENT DIVERSIFICATION – Dental, specialists, IVF, occupa
Slide 13: MCPB: Health & Co
MCPB: HEALTH & CO FY 2017 » Launch of brand and partnership Underlying $m with Professor Kerryn Phelps Revenue 1.8 » 5 clinics in Health & Co network EBITDA (2.3) to-date EBIT (2.3) » Strong pipeline of interest Capital expenditure 8.4 13 FY17 RESULTS
Slide 14: Pathology: FY 2017 Analysis
PATHOLOGY: FY 2017 ANALYSIS FY 2017 FY 20161 Better/ Underlying $m $m (worse) % Revenue 1,038.4 994.4 4.4 EBITDA 146.0 144.9 0.8 Depreciation (18.8) (19.1) 1.6 Amortisation (7.7) (7.5) (2.7) EBIT 119.5 118.3 1.0 Capital expenditure 26.9 40.5 33.6 » Above market revenue growth of $44.0m or 4.4% – Inc
Slide 15: Pathology: Strategy
PATHOLOGY: STRATEGY » ACC costs – Net 124 ACCs in response to Government policy uncertainty – Strategy reset with greater policy clarity – FY 2018 initiatives to reduce rental cost growth: » Rent negotiation discipline » Portfolio assessment v target margins » Exit or renegotiate underperforming sit
Slide 16: Imaging: FY 2017 Analysis
IMAGING: FY 2017 ANALYSIS FY 2017 FY 20161 Better/ Underlying $m $m (worse) % Revenue 333.5 326.9 2.0 EBITDA 57.8 61.9 (6.6) Depreciation (16.8) (25.6) 34.4 Amortisation (12.0) (13.9) 13.7 EBIT 29.0 22.4 29.5 HCP capital expenditure 4.3 10.3 58.3 Capital expenditure 28.2 54.5 48.3 » Strong EBIT expa
Slide 17: Imaging: Strategy
IMAGING: STRATEGY » HCP contracts – Radiologists stable at 115 – 70% starters on ‘no upfront’ contracts » Portfolio alignment and investing for growth – Hospital contracts (Holmesglen) – Northern Beaches PPP critical for enhancing reputation in FY18-19 – Fit for purpose high-end imaging centres (Riv
Slide 18: Digital Investment
DIGITAL INVESTMENT » Deliver a secure and scalable platform. Investments underway or in planning: 18 FY17 RESULTS
Slide 19: Government & Summary
GOVERNMENT & SUMMARY 19 FY17 RESULTS
Slide 20: Government Policy
GOVERNMENT POLICY » Federal Budget gave clarity on: – Progressive restoration of Medicare indexation for GPs, specialists, some imaging modalities. Delivers ~$3.5m annual revenue growth in FY 2019 – Bulk bill incentives to remain in pathology and imaging – Rent regulation for pathology ACCs removed
Slide 21: Wrap Up
WRAP UP » Aims – Cement position as leading supporter of quality healthcare services – Deliver long-term sustainable growth to shareholders – Become preferred place for HCPs to practise, staff to work, and patients to visit – Drive patient-centricity throughout Primary modalities with Medical Centre
Slide 22: Appendices: Market Leading Network
APPENDICES A MARKET LEADING NETWORK As at August 2017 22 FY17 RESULTS
Slide 23: Industry Trends
INDUSTRY TRENDS 5 year growth rate of 6.1% 5 year growth rate of 3.9% 5 year growth rate of 6.0% 5 year growth rate of 5.3% 23 FY17 RESULTS
Slide 24: Underlying Results by Division
UNDERLYING RESULTS BY DIVISION FY 2017 Medical Health & Co Pathology Imaging Corporate Group $M Centres BB Revenue1 317.8 1.8 1,038.4 333.5 0.1 1,658.6 EBITDA 125.8 (2.3) 146.0 57.8 (16.1) 311.2 Depreciation (20.8) (0.0) (18.8) (16.8) (2.8) (59.2) Amortisation (55.4) (0.0) (7.7) (12.0) (2.3) (77.4)
Slide 25: Reconciliation of Reported to Underlying FY 2017
RECONCILIATION OF REPORTED TO UNDERLYING FY 2017 FY 2017 Reported Impairment Restructuring & Non-recurring Underlying $M strategic initiatives items Revenue 1,658.6 0.0 0.0 0.0 1,658.6 EBITDA (333.1) 587.0 39.2 18.1 311.2 Depreciation (59.2) 0.0 0.0 0.0 (59.2) Amortisation (77.4) 0.0 0.0 0.0 (77.4)
Slide 26: Reconciliation of Reported to Underlying FY 2016
RECONCILIATION OF REPORTED TO UNDERLYING FY 2016 Reported Balance Restructuring Gain on Sale ATO settlement Underlying FY 2016 Sheet & strategic / Dissolution $M Review initiatives Revenue 1,641.9 0.0 0.0 (23.4) 0.0 1,618.5 EBITDA 271.1 83.2 31.9 (23.4) (13.5) 349.3 Depreciation (70.1) 2.8 1.0 0.0 0
Slide 27: MCBB: FY 2017 Analysis
MCBB: FY 2017 ANALYSIS FY 2017 FY 2016 1 Better/ Underlying $m $m (worse) % Revenue 317.8 328.7 (3.3) EBITDA 125.8 152.8 (17.7) Depreciation (20.8) (20.0) (4.0) Amortisation (55.4) (60.9) 9.0 EBIT 49.6 71.9 (31.0) HCP capital expenditure 30.3 60.6 50.0 EBITDA less HCP capital expenditure 95.5 92.2 3
Slide 28: Cash Flow Reconciliation
CASH FLOW RECONCILIATION Underlying FY 2017 FY 2016 Movement $m $m $’m Operating cash flows 212.2 225.8 (13.6) Payments for PP&E, HCPs, intangibles (128.6) (193.1) 64.5 Free cash flow 83.6 32.7 50.9 Capital recycling 10.9 327.3 (316.4) ATO refund - 49.0 - MedicalDirector operating cash flow - 10.3 -
Slide 29: Tax Implications of HCP Acquisitions
TAX IMPLICATIONS OF HCP ACQUISITIONS » Healthcare Practitioners 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. – Equal movement in DTL will en
Slide 30: Disclaimer
DISCLAIMER » This presentation has been prepared by Primary Health Care Limited (ACN 064 530 516) (‘PRY’). » Material in this presentation provides general background information about PRY which is current as at the date this presentation is made. Information in this presentation remains subject to