Spire Healthcare Group Plc · LSE:SPI
Spire Healthcare — H1 2018 Earnings Presentation
33 slides from Spire Healthcare's earnings presentation, Sep 18, 2018
Slide 1: 2018 Half Year Results Presentation
2018 Half Year Results Presentation 18 September 2018
Slide 2: Disclaimer
Disclaimer These materials contain certain forward-looking statements relating to the business of Spire Healthcare Group plc (the “Company”), including with respect to the progress, timing and completion of the Company’s development, the Company’s ability to treat, attract, and retain patients and c
Slide 3: Agenda
Agenda Introduction Garry Watts, Chairman H1 2018 Operational Overview Justin Ash, Chief Executive Officer H1 2018 Financial Review David Lomas, Interim Chief Financial Officer Outlook for FY 2018 & Beyond Justin Ash, Chief Executive Officer 3
Slide 4: Introduction
Introduction Garry Watts, Chairman 4
Slide 5: H1 2018 Performance Overview
H1 2018 Performance Overview Underlying H1 performance down on previous year reflecting significantly declining NHS admissions and lower than anticipated growth in Private admissions Revenue Cash flow Slightly down at £475.6m, with Continuing strong cash conversion underlying growth in Priva
Slide 6: H1 2018 Operational Overview
H1 2018 Operational Overview Justin Ash, Chief Executive Officer 6
Slide 7: Performance vs Plan – H1 2018
Performance vs Plan – H1 2018 Strategic investments .….in a challenging environment made as planned….. 2018 Costs in line with budget, Revenue down and Consolidate but not flexible with mix changes Focus on Clinical quality Investment to lead on PMI on track, some clinical quality shift to onc
Slide 8: Key Takeaways - H1 2018
Key Takeaways - H1 2018 With recent market/sector developments reinforcing our two core strategies, Spire will remain the leading player in a rapidly evolving sector Core strategies reinforced Sector challenged by rate of change Focus on clinical quality and NHS waiting lists continue to reach i
Slide 9: H1 2018 Financial Review
H1 2018 Financial Review David Lomas, Interim Chief Financial Officer 9
Slide 10: Trading Headlines
Trading Headlines Underlying H1 performance down on previous year due to declining NHS revenues Overall revenue broadly flat with 1.1% decline on H1 2017 to £475.6m Underlying revenue growth from Private Payors offset by lower NHS revenue, leading to underlying revenue decline of 2.4%. Revenue
Slide 11: Financial Highlights H1 2018
Financial Highlights H1 2018 H1 2018 H1 2017 Growth £m £m % Underlying Revenue 445.6 456.6 (2.4)% Spire St Anthony’s, Spire Manchester & 30.0 24.4 23.0% Spire Nottingham Group Revenue 475.6 481.0 (1.1)% H1 2018 Underlying Revenue mix H1 2017 Underlying Revenue mix 11
Slide 12: Financial Highlights H1 2018
Financial Highlights H1 2018 H1 2018 H1 2017 Growth £m £m % Underlying EBITDA 65.3 82.8 (21.1)% Spire St Anthony’s, Spire Manchester & 0.8 0.4 100.0% Spire Nottingham Group EBITDA 66.1 83.2 (20.6)% H1 2018 H2 2017 H1 2017 % % % Underlying EBITDA margin 14.7% 16.3% 18.1% Spire St Anthony’s, Spire Man
Slide 13: Revenue & Admissions Growth - Underlying
Revenue & Admissions Growth - Underlying Revenues H1 2018 H1 2017 Underlying Total Group £m £m growth % growth % PMI 203.6 204.1 (0.2)% 1.0% Self pay 81.4 76.1 7.0% 8.3% NHS 136.3 151.5 (10.0)% (9.2)% Partnerships 12.2 12.6 (3.2)% (1.5)% Other 12.1 12.3 (1.6)% 1.6% Total revenues 445.6 456.6 (2.4)%
Slide 14: NHS Revenues Analysis - Underlying
NHS Revenues Analysis - Underlying Underlying revenues H1 2018 H1 2017 Growth % £m £m eReferral 120.0 127.2 (5.6)% NHS Local Contract 16.2 24.3 (33.3)% NHS total revenues 136.3 151.5 (10.0)% Underlying revenue growth rate H1 2018 H2 2017 H1 2017 % % % eReferral (5.6)% 0.8% 10.2% NHS Local Contract (
Slide 15: Revenue Bridge By Payor - Underlying
Revenue Bridge By Payor - Underlying Underlying revenues H1 2017 Volume Rate OPD H1 2018 £m £m £m £m £m PMI 204.1 (4.7) 4.8 (0.6) 203.6 Self pay 76.1 0.4 3.9 1.0 81.4 NHS 151.5 (11.5) (1.6) (2.1) 136.3 Partnerships 12.6 (0.4) 0.4 (0.4) 12.2 Totals (Group revenue 444.3 (16.2) 7.5 (2.1) 433.5 other re
Slide 16: Trading Margin Analysis - Underlying
Trading Margin Analysis - Underlying Costs as % revenues H1 2018 H1 2017 FY 2017 % % % Clinical staff costs 19.1% 18.0% 18.8% Direct costs 22.4% 21.9% 21.9% Medical fees 10.7% 11.2% 11.1% Cost of sales 52.2% 51.0% 51.8% Costs as % revenues – Underlying H1 2018 H1 2017 FY 2017 % % % Gross margin 47.8
Slide 17: Cash Flow For The Period
Cash Flow For The Period H1 2018 H1 2017 £m £m Operating cash flow before exceptionals and tax 62.2 81.2 Exceptional items (1.4) (4.9) Taxation (1.4) (0.6) Net cash used in investing activities (33.4) (59.1) Net cash used in financing activities (20.1) (19.6) Net increase / (decrease) in cash 5.9 (3
Slide 18: Cash Flow For The Period
Cash Flow For The Period H1 2018 H1 2017 £m £m Operating cash flow before exceptionals and tax 62.2 81.2 EBITDA 66.1 83.2 Cash conversion of EBITDA 94.1% 97.6% 18
Slide 19: Outlook for FY2018 and beyond
Outlook for FY2018 and beyond Justin Ash, Chief Executive Officer 19
Slide 20: Overview Of Key Metrics
Overview Of Key Metrics Business metric H1 2018 vs FY 2018 vs Future trend, Budget 2018 FY 2017 FY 2019 onwards Admissions ARPC Outpatient Clinical/hospital costs Overheads Overall costs Capex 20 20
Slide 21: Outlook for FY 2018 And Beyond
Outlook for FY 2018 And Beyond Clinical quality & customer care Progress on new hospitals NHS environment Overview of key metrics Payor group initiatives & long Revised outlook for the financial term targets year Cost savings and opportunities Summary position Core capital expendit
Slide 22: Clinical Quality & Customer Care
Clinical Quality & Customer Care Regulatory & payor requirements have become much more robust in recent months Government is increasingly involved in safety discussions “The IS can play a useful role adding capacity, promoting innovation and offering patients choice….However, if the sector is to
Slide 23: Clinical Quality & Customer Care
Clinical Quality & Customer Care Spire’s investment in clinical quality is a key foundation for the future Actions/Investments 2018 Spire’s regulatory status is progressing Enlarged internal inspection team - 2 English facilities are mainly rated day inspections, action plan each site, ‘Good’ (2
Slide 24: NHS Environment
NHS Environment NHS cost constraints and referral management schemes underwent a shift change in H1 2018 CCGs rationing the funding of treatment of acute and chronic conditions, especially orthopaedics NHS waiting lists highest for over a decade 4.3m at 31 July 2018, and forecast by NHSPN to r
Slide 25: Payor Group Initiatives & Long Term Targets
Payor Group Initiatives & Long Term Targets PMI Self-Pay NHS Good contractual relations Spire Opportunity Tool NHS market to remain with all PMIs (SpOT) shows Spire has volatile – NHS 10 year significant potential strategy awaited Growth to come from pricing, new facilities, H2 central mar
Slide 26: Cost Savings & Opportunities
Cost Savings & Opportunities Significant cost savings already actioned & opportunities for further efficiencies as volumes grow Specific actions already taken or Opportunities for costs savings & planned in FY 2018 efficiencies from FY 2019 onwards H1 2018: Procurement and purchasing Restructure
Slide 27: Core Capital Expenditure Review
Core Capital Expenditure Review FY 2018 FY 2019 Onwards Area of spend Amount Spire able to reduce Capex significantly from historic levels Maintenance c.£44m Track record of good estate investment Upgrades c.£12m Planned operating efficiency improvements New capability and capacity c.£22m Co
Slide 28: Progress At New Hospitals
Progress At New Hospitals Spire St Anthony’s Spire Manchester Spire Nottingham CQC rating = ‘Good’ CQC inspection CQC rating = awaited ‘Outstanding’ Development complete Strong revenue and Growth in revenue as Ongoing cost base EBITDA growth YoY consultants build restructuring/ reduction
Slide 29: Revised Outlook For The Financial Year
Revised Outlook For The Financial Year Payor group revenue expectation for H2 2018 Self-Pay Continued good growth PMI Moderate increase over H2 2017 NHS eReferral & Local Contract significantly lower than H2 2017 Mix Continuing NHS orthopaedic reduction, and some PMI shift from orthopaedic to cancer
Slide 30: Summary Position
Summary Position Spire is a strong business, investing into headwinds to build a winning platform FY 2019 onwards Clinical strength underpins all payor strategies Realise benefits of PMI network expansions Convert new self-pay capability to planned growth Realise operating efficiencies and c
Slide 31: Long Term Strategy
Long Term Strategy Private Clinical Quality/ Annual revenues Customer Care EBITDA = = = 80% of total 100% £200m 31 31
Slide 32: Questions
Spire Healthcare Lovking after gM
Slide 33: 2018 Half Year Results Presentation
2018 Half Year Results Presentation 18 September 2018
Spire Healthcare Group — H1 2018 Earnings Presentation on 6ix