Life Healthcare Group Holdings Limited · JSE:LHC
Life Healthcare — FY2018 Earnings Presentation
40 slides from Life Healthcare's earnings presentation, Nov 18, 2018
Slide 1: Summarised Consolidated Results for the Year Ended 30 September 2018
SUMMARISED CONSOLIDATED RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2018 AND CASH DIVIDEND DECLARATION
Slide 2: Group Overview: Excellent results
Group Overview Excellent results 2 Revenue Cash generated from Normalised EBITDA operations +12.9% +18.0% +10.7% to R23.5 billion to R5.5 billion to R5.5 billion Headline earnings per share Normalised earnings per Final dividend (HEPS) share +40.6% +17.4% +11.1% to 108.8 cps to 110.2 cps to 50 cps w
Slide 3: 2018: Group Overview - Strong operational performance
2018: Group Overview Strong operational performance across the Group 3 Life Healthcare southern Africa (SA): Positive paid patient day (PPD) growth Excellent year-on-year growth in complementary and healthcare services Good improvement in clinical quality outcomes Annual PPD growth impacted
Slide 4: 2018: Group Overview - Strong operational performance
2018: Group Overview Strong operational performance across the Group 4 Alliance Medical Group Limited (Alliance Medical): Solid performance driven by strong PET-CT wave 1 growth Obtained four PET wave 2 contracts Integrated diagnostic centre (IDC) sign-up in the United Kingdom (UK) ahead of pl
Slide 5: Strategic focus areas
2018: Group Overview Strategic focus areas 5 Successful strategy implementation of diversifying across business lines and territories Over one third of our business comes from non-acute sources Revenue (%) Acute vs non-acute revenue (%) EBITDA (%) 65% 73% 72% 77% Southern Africa 76% Acute 89% So
Slide 6: Strategic focus areas
2018: Group Overview Strategic focus areas 6 Operational excellence: Growth: Group has a history and culture of driving operational excellence Grow the Group to an international healthcare provider, while still H2 performance: focussing heavily on SA growth and implementation of new initiative
Slide 7: Operational Review
Operational Review Dr Shrey Viranna | Group CEO Southern Africa
Slide 8: Southern Africa: steady increase in PPDs, revenue and EBITDA
Southern Africa Business review: steady increase in PPDs, revenue and EBITDA 8 30 Sept 30 Sept Change 2018 2017 % Solid PPD growth across all business units with strong PPD GROWTH 1.1% -1.7% growth in complementary services of over 5.0% Good revenue growth enhanced by complementary services grow
Slide 9: Southern Africa: capacity growth and utilisation
Southern Africa Business review: capacity growth and utilisation 9 Capacity growth Conservative growth in brownfield expansion beds across six hospitals • Life Midmed FY 2018 H1 2018 H2 2018 • Life St Mary’s Private Bed additions at existing • Life Queenstown Private 131 88 43 • Life Cosmos facili
Slide 10: Healthcare Services
Healthcare Services Strong growth in revenue 10 Revenue (R’m) EBITDA (R’m) H1 2018 H2 2018 Life Esidimeni: • Positive engagement with Department of +28.8% +8.3% Health resulting in re-admission of 700 Gauteng mental healthcare users • 39 additional beds 554 • Renewal of Shiluvana contract 60 62
Slide 11: 5 Year Revenue Split
5 Year Revenue Split Business review: continued growth across key businesses 11 Revenue (R’m) Healthcare Services Complementary Acute Underlying acute and complementary FY2018 margins 17 240 7.6% 1 122 28.8% • Overall margins declined from 25.5% to 24.9%. 15 890 Lower margins within healthcare ser
Slide 12: Quality
Quality Quality outcomes and patient experience continue to show overall improvement 12 30 Sept 30 Sept 2018 2017 Measure Patient quality and safety measures HAI (Healthcare associated infection) 0.41 0.42 Per 1 000 PPDs VAP (Ventilator associated pneumonia) 1.09 1.48 Per 1 000 ventilator days SSI (
Slide 13: Operational Review: International
Operational Review Dr Shrey Viranna | Group CEO International
Slide 14: Alliance Medical Overview
Alliance Medical Overview 14 UK Italy Ireland Other geographies DI static sites 33 Spain Netherlands PET-CT national Owned clinics 33 Operating sites 23 contract sites 32 Static sites 11 Germany Finland Mobiles 45 Bulgaria Norway Revenue % 48% Revenue % 31% Revenue % 10% Switzerlan
Slide 15: Alliance Medical: Stable overall performance
Alliance Medical Stable overall performance with investment in future growth 15 30 Sept 30 Sept Change Revenue grew by 8.4% on the back For 12 months 2018 Piramal H2 2018 H1 2018 2017 % of strong PET-CT growth in the UK, good northern Europe growth and a Revenue (£’m) 283 4 144 135 261 8.4 solid p
Slide 16: Alliance Medical UK
Alliance Medical UK 16 % PET-CT as a % of UK revenue Molecular imaging (MI): • PET wave 1 100 80 • MI growth underpinned by 10 year PET wave 1 contract 58 54 48 60 • Continued strong PET-CT volume growth of 15.2% 40 • Growth benefitting from roll-out of static PET-CT sites 52 20 42 46 • Pricing ce
Slide 17: Alliance Medical UK: Growth in longer-term contracts
Alliance Medical UK 17 Growth in longer-term contracts Diagnostic imaging (DI): % Short-term Long-term • Strategic focus continues to be partnership solutions 100 with hospital trusts 80 44 • Alliance Medical UK benefitting from the move away from 58 60 75 mobile infrastructure / short-term or spo
Slide 18: Alliance Medical Italy and Ireland
Alliance Medical Italy and Ireland 18 Italy: Ireland: Private clinics MRI and CT volumes increased 14% on the back Continues to show solid volume growth in clinics, statics of increased volumes and the acquisitions of: and mobiles • Albaro Clinic, acquired in H1 2017, performing ahead of Rolli
Slide 19: Alliance Medical northern Europe / clinical trials and Scanmed
Europe Alliance Medical northern Europe / clinical trials and Scanmed 19 Northern Europe: Poland: • Good revenue growth on the back of the Life • Strong business turnaround Radiopharma acquisition in H2 2017 • Good volume growth in cardiology • Growth is within the context of a lower EBITDA marg
Slide 20: Financial Review
Financial Review Pieter van der Westhuizen | Group CFO
Slide 21: Highlights
Highlights 21 Good performance Strong cash generated across all territories from operations with improved for the year with cash performance in H2 generated from operations up 18.0% Normalised earnings per Final cash dividend of 50 share up 17.4% cents per share on the back of good Total dividend of
Slide 22: Summarised profit or loss
Summarised profit or loss Group 22 2018 2017 R’m R’m % Revenue 23 488 20 797 12.9 Revenue growth largely due to Alliance Medical included for 12 months compared to 10.3 months Normalised EBITDA 5 535 5 001 10.7 in 2017 and the weakening of the rand against the pound sterling, euro and polish zloty N
Slide 23: Financial Results
Financial Results Group 23 2018 2017 R’m R’m % Revenue 23 488 20 797 12.9 Southern Africa 17 240 15 890 8.5 Alliance Medical 4 922 3 812 29.1 Increased overheads related to capacity building, empowerment spend and governance Alliance Medical – product dev 66 - >(100) Poland 1 260 1 095 15.1 Normalis
Slide 24: Financial Results: EPS and HEPS
Financial Results Group 24 30 Sept 2018 30 Sept 2017 Change % Weighted average number of shares (million) 1 451 1 310 10.8 EPS (cents) 108.6 62.2 74.6 Impairments of assets and investments 2.3 12.8 Profit on remeasuring previously held interest in associate to fair value - (0.4) (Profit)/loss on dis
Slide 25: Summarised Consolidated Statement of Financial Position
Summarised Consolidated Statement of Financial Position 25 2018 2017 R’m R’m Non-current assets 30 558 31 459 Property, plant and equipment 12 243 11 131 Goodwill 12 991 12 170 Intangible assets 4 093 4 111 Investment in Max (reclassified as held for sale) - 2 960 Other 1 231 1 087 Current assets (e
Slide 26: Debt and debt facilities
Debt and debt facilities 26 30 Sept Weighted 30 Sep Weighted 2018 avg. cost of 2017 avg. cost of Funding R’m debt R’m debt (post-tax) (post-tax) Available bank facilities Acquisition funding R’m Utilised Available ZAR 3 551 7.31 4 851 7.32 24 000 PLN 830 3.75 801 3.77 20 000 GBP 1 311 2.42 992 2.26
Slide 27: Cash Flow
Cash Flow Group 27 30 Sept 30 Sept Cash generated from operations 2018 2017 Change R’m R’m R’m % Cash generated as % of normalised 6 000 EBITDA 120% Cash generated from operations 5 503 4 663 18.0 5 500 Net interest paid (863) (621) 103% 5 000 99% 100% Tax paid (1 065) (891) 97% 95% 93% 93% Maintena
Slide 28: Distribution
Distribution 28 Cents per Distributions share R’m Interim 2017 35 504 Final 2017 45 652 Total 2017 80 1 156 Interim 2018 38 556 Final 2018 50 734 Total 2018 88 1 290 The Group’s dividend policy is to pay a progressive dividend that takes into account the underlying earnings and available funding o
Slide 29: Outlook
Outlook Dr Shrey Viranna | Group CEO
Slide 30: 2019: Outlook
2019 : Outlook 30 Southern Africa: Capex spend for FY2019 for approximately R1.2 billion, of which R850 million relates to maintenance capex Conservative brownfield bed expansion and addition of a new 80 bed mental health facility, opening in Q2 2019 Alliance Medical: Capex spend for FY2019 of
Slide 31: 2019: Strategic Focus
2019: Strategic Focus 31 Continued focus on evolving the Group’s operating model leveraging off existing assets and existing scale Complementary Employee Health Government / Acute hospital services Step down Solutions Off-site clinics public sector business 15 units/831 beds facilities 381 sites 1
Slide 32: 2019: Strategic Focus
2019: Strategic Focus 32 Continued focus on evolving the Group’s operating model leveraging off existing assets and existing scale Step down Employee Health Government / Acute hospital Complementary Off-site clinics facilities Solutions public sector business services Home Nursing • Continued good
Slide 33: Questions
Questions 33 Revenue Cash generated from Normalised EBITDA operations +12.9% +18.0% +10.7% to R23.5 billion to R5.5 billion to R5.5 billion Headline earnings per share Normalised earnings per Final dividend (HEPS) share +40.6% +17.4% +11.1% to 108.8 cps to 110.2 cps to 50 cps www.lifehealthcare.co.z
Slide 34: Annexures
Li ae Group HEALTH [ig CARE | Annexures
Slide 35: Southern Africa Business review
Southern Africa Business review 35 Acute Complementary Healthcare hospitals services services Proportion of SA revenue 87.9% 5.6% 6.5% 4 year revenue 7.2% 16.0% 6.8% CAGR 50 acute hospitals: 7 acute rehabilitation 10 PPP facilities 8 224 beds units 3 119 beds 2 023 000 PPDs 319 beds 301 occupational
Slide 36: Southern Africa: Market dynamics frame the opportunity for growth
Southern Africa Market dynamics frame the opportunity for growth 36 Ageing Implications % PPDs/revenue from patients aged 50+ Increasing proportion of PPDs and revenue come from patients above 2013 2017 2018 55 50 years of age 54 48 48 50 43 % Difference LOS differential patients >50 years vs <50
Slide 37: Southern Africa: medical / surgical growth
Southern Africa Business review: medical / surgical growth 37 Total medical / surgical split as a % of PPDs Medical Surgical 54.5% 54.9% 55.3% Continued growth of medical cases on the 56.0% 53.1% 52.8% 53.4% 52.4% back of complementary growth 52.0% 47.6% 46.9% 47.2% 48.0% 46.6% 45.5% 45.1% 44.7%
Slide 38: Alliance Medical: Positive diagnostic growth drivers
Alliance Medical Positive diagnostic growth drivers frame the opportunity for growth 38 % Population 65+ % + 7.9m +7.1m +0.7m +8.6m Ageing population 50 people people people people 36% of MRIs and 60% of CTs performed on people over 60 years of age 0 UK Italy Ireland Germany 2006 2016 2026 2036 Ur
Slide 39: UK diagnostic volumes predicted to continue to grow strongly
Alliance Medical UK diagnostic volumes are predicted to continue to grow strongly 39 Market CAGRs 2015-17: 5.6% 2015-17: 27% 2015-17: 6.2% 2025 Forecast: 5.6% 2025 Forecast: 12% 2025 Forecast: 6.2% UK MRI scans (million) UK PET-CT (000) UK CT scans (million) NHS 3rd party Forecast NHS 3rd party Fore
Slide 40: Life Healthcare Group
Li ae Group HEALTH [ig CARE
Life Healthcare Group Holdings — FY2018 Earnings Presentation on 6ix