Healius Limited · ASX:HLS
Healius — Primary Health Care — H1 FY2015 Earnings Presentation
25 slides from Healius's earnings presentation, Feb 18, 2015
Slide 1: Interim FY 2015 results
Interim FY 2015 results 6 months ended 31 December 2014 18 February 2015
Slide 2: Highlights
Highlights Solid trading result for 1H FY2015; change in accounting policy for acquisition of healthcare practices First half result highlights • EBITDA up 2.1% on prior corresponding period • EPS1 up 5.0% to 10.5 cents per share • Interim dividend of 9.0 cents per share • Change in accounting polic
Slide 3: Change in accounting policy for healthcare practice acquisitions
Change in accounting policy for healthcare practice acquisitions Background • Change in accounting policy for acquisition of healthcare practices • Impacts accounting for doctors’ acquisitions in Medical Centres (GP, specialist and allied health) and Imaging • No impact on Pathology New accounting p
Slide 4: Change in accounting policy for healthcare practice acquisitions (cont’d)
Change in accounting policy for healthcare practice acquisitions (cont’d) Financial implications • No change to EBITDA • No change to cash spend • No change to dividends per share • No impact on debt covenants • No negative tax implications • Incremental amortisation expense $26.0 million in 1H FY20
Slide 5: Change in accounting policy for healthcare practice acquisitions (cont’d)
Change in accounting policy for healthcare practice acquisitions (cont’d) Example • Doctor acquisition cost = $400,000 • Contract period = 5 years Scenario Accounting Item Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 <10 km1 Goodwill 280,000 280,000 280,000 280,000 280,000 280,000 Intangibles 120,000 9
Slide 6: Change in accounting policy for healthcare practice acquisitions (cont’d)
Change in accounting policy for healthcare practice acquisitions (cont’d) • Dividends 6 months ended 6 months ended cents per share 31 December 2013 31 December 2014 (restated) Dividends Per Share 9.0 9.0 Earnings Per Share 10.5 10.0 Payout ratio 86% 90% • 1H FY2015 dividend of 9.0 cents per share i
Slide 7: Summary income statement
Summary income statement 6 months to 6 months to $ million 31 December 31 December % change 2014 2013 (restated) Revenue 798.6 751.0 6.3% EBITDA 196.1 192.1 2.1% EBITDA margin 24.6% 25.6% Depreciation (33.2) (31.4) Amortisation1,2 (42.1) (41.5) Depreciation & Amortisation Accelerated Write-Down3 (8.
Slide 8: Medical Centres
Medical Centres Strong revenue and earnings growth (despite an uncertain funding environment) 6 months ended 6 months ended $ million 31 December 2013 % change 31 December 2014 (restated) Revenue 161.5 151.7 6.4% EBITDA 90.0 84.7 6.3% EBITDA margin (%) 55.8% 55.8% EBIT1 51.7 49.2 5.0% EBIT margin (%
Slide 9: Pathology
Pathology Good revenue growth and performing well given external pressures 6 months ended 6 months ended $ million 31 December 2013 % change 31 December 2014 (restated) Revenue 459.5 436.2 5.4% EBITDA 73.0 74.8 (2.4%) EBITDA margin (%) 15.9% 17.2% EBIT1 60.8 63.8 (4.7%) EBIT margin (%) 13.2% 14.6% •
Slide 10: Pathology: Collection centres and deregulation
Pathology: Collection centres and deregulation Primary is moderating its Collection Centre (“ACC”) activities Commentary Primary’s “Like with Like” ACC market share • We are moderating our ACC activities 37.0% • Our current national market share of collection centres is in line with pre-deregulation
Slide 11: Imaging
Imaging Strong result as performance continues to improve 6 months ended 6 months ended $ million 31 December 2013 % change 31 December 2014 (restated) Revenue 173.7 156.3 11.2% EBITDA 39.3 35.5 10.6% EBITDA margin (%) 22.6% 22.7% EBIT1 20.2 16.4 23.4% EBIT margin (%) 11.6% 10.5% • 10.6% increase in
Slide 12: Health Technology
Health Technology Positive renewal trend however revenue and earnings remain broadly flat 6 months ended 6 months ended $ million 31 December 2013 % change 31 December 2014 (restated) Revenue 18.7 18.3 2.3% EBITDA 9.8 9.8 0.4% EBITDA margin (%) 52.5% 53.5% EBIT1 1.8 5.4 EBIT margin (%) 9.4% 29.7% •
Slide 13: Cash flow
Cash flow Strong growth in net operating cash flow 6 months ended 6 months ended $ million 31 December 2013 % change 31 December 2014 (restated) Receipts from customers 811.4 770.4 Payments to suppliers and employees (617.8) (596.3) Gross Operating Cash Flow 193.6 174.1 11.2% Interest and other cost
Slide 14: Capital investment
Capital investment Capital investment to drive future growth 6 months ended 6 months ended $ million 31 December 2013 % change 31 December 2014 (restated) Property, plant and equipment 38.0 28.6 Acquisitions, extensions and software1 56.2 54.1 3.9% Sub-total 94.2 82.7 Brookvale medical centre 2.8 14
Slide 15: Debt position
Debt position Head room available to pursue growth initiatives $ million 31 December 2014 30 June 2014 Bank and finance debt 1,015.3 945.3 Cash (34.5) (27.5) Retail Bonds 152.3 152.3 Net debt 1,133.1 1,070.2 • Increase in net debt primarily due to purchase of Barangaroo office site and Transport Hea
Slide 16: Primary Health Care today
Primary Health Care today • #1 national provider of large-scale medical centres (58) Medical • Continue to increase the number of GPs, specialists and other allied health providers Centres • Significant growth opportunities – backfill existing centres, new centre rollout • Improving margins demonstr
Slide 17: Health industry
Health industry Strong fundamentals underpin the growth of the Australian healthcare industry Positive demographic trends • Australia’s population forecast to grow at 1.9% p.a. from 2012 to 20241 • Number of Australians aged over 65 years expected to increase by 3.4% pa over this period1 • Highest h
Slide 18: Health industry (cont’d)
Health industry (cont’d Demand for healthcare services reflects strong industry fundamentals Number of GP services (millions)1,2 Referral rate per GP encounter (2005 = 100)1,2 140 200 120 180 100 160 80 140 60 40 120 20 100 2005 2008 2011 2014 0 2005 2008 2011 2014 Allied Health Imaging Pathology 1.
Slide 19: Divisional scale
Divisional scale Divisional scale is critical to the Primary model • Scale in each of Primary’s divisions delivers: - Benefits for patients, doctors and funders - Ability to better manage funding dynamics - Range of services to offer comprehensive healthcare outcomes - Capacity to make significant i
Slide 20: Funding - observations
Funding - observations General practice is delivering some of the best value for money in the healthcare system • Past 9 months several Govt proposals abandoned. New Health Minister. Consultations underway. • GP expenditure by Medicare is not the problem: - Real growth in Medicare GP expenditure is
Slide 21: Summary and outlook
Summary and outlook First half result highlights • EBITDA up 2.1% • EPS1 up 5.0% • DPS maintained at 9.0 cps fully franked Reconfirm FY 2015 earnings guidance • EBITDA expected to be in the range of $410 million to $425 million • EPS growth of 5-12% (FY 2014 restated EPS 22.7 cps) Pipeline of future
Slide 22: Appendix – Impact of changes in accounting policy (Appendix 4D, Note 2)
Appendix – Impact of changes in accounting policy (Appendix 4D, Note 2) Impact on Income Statement for the half year ended 31 December 2013 Restated Restatement As reported $ million 31 December 2013 Increase/(decrease) 31 December 2013 EBITDA 192.1 - 192.1 Depreciation 31.4 - 31.4 Amortisation of I
Slide 23: Appendix – Impact of changes in accounting policy (Appendix 4D, Note 2) – cont’d
Appendix – Impact of changes in accounting policy (Appendix 4D, Note 2) – cont’d Impact on the Balance Sheet as at 30 June 2014 Restated Restatement As reported $ million 30 June 2014 Increase/(decrease) 30 June 2014 Goodwill 2,884.3 (426.2) 3,310.5 Other intangible assets 272.4 139.9 132.4 Deferred
Slide 24: Appendix – Impact of changes in accounting policy (Appendix 4D, Note 2) – cont’d
Appendix – Impact of changes in accounting policy (Appendix 4D, Note 2) – cont’d Impact on the Cash Flow Statement for the half-year ended 31 December 2013 Restated Restatement As reported $ million 31 December 2013 Increase/(decrease) 31 December 2013 Cash flows from investing Businesses purchased
Slide 25: 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
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