New Frontier Health Corporation
New Frontier Health — Q2 2020 Earnings Presentation
46 slides from New Frontier Health's earnings presentation, Aug 27, 2020
Slide 1: New Frontier Health Q2 2020 Results
1 1 New Frontier Health Q2 2020 Results Aug 27, 2020
Slide 2: Disclaimer: Forward-Looking Statements
2 2 Disclaimer Forward - Looking Statements This presentation includes “forward - looking statements” within the meaning of the “safe harbor” provisions of the Private Securi ties Litigation Reform Act of 1995. The actual results of New Frontier Health Corporation (the “Company”) may differ from the
Slide 3: Table of Contents
3 3 Overview Q2 2020 Business Highlights Q2 2020 Financial R esults Growth Initiatives Appendix A - I ndustry Overview Appendix B - Additional Materials Table of Contents
Slide 4: Overview
4 4 Beijing United Family Hospital North ( 2020 ) OVERVIEW
Slide 5: Leading Private Healthcare Service Provider in China
5 5 Leading Private Healthcare Service Provider in China COMPREHENSIVE SERVICE OFFERING covering 30+ specialties 9 hospitals 1 14 clinics 1 1,000+ licensed beds 800+ physician staff 1000+ physician consultants 2019 A outpatient visits: ~ 6 33 ,000 2019 A inpatient visits: ~ 11, 000 Operating Assets
Slide 6: Nationwide Geographic Footprint
6 6 5 Hospitals Hub Spoke 8 Clinics Hub - and - Spoke Model 2 Hospitals Hub Spoke 4 Clinics Hub - and - Spoke Model 2 Hospitals Hub Spoke 2 Clinics Hub - and - Spoke Model Beijing Tianjin Qingdao Guangzhou Hangzhou Hainan Shenzhen 2 Shanghai Source: Company ; As of Dec 31, 2019 1. 5 hospitals in Bei
Slide 7: Diversified Foundation for Future Growth
7 7 Expat 46% Local 54% BROADER ADDRESSABLE MARKET WITH MORE LOCAL PATIENTS 3 Commercial Insurance 37% Self - pay 63% Diversified Foundation for Future Growth Expat 29% Local 71% MULTI - SPECIALTY SERVICE OFFERING 1 2019A Source: Company 1. OB/GYN: Obstetrics and Gynecology; Peds: Pediatrics; Ortho:
Slide 8: Revenue driven by high acuity departments including Orthopedics & Surgery
8 8 Revenue driven by high acuity departments including Orthopedics & Surgery High Acuity 163 351 2014 2019A Surgery Orthopedics Potential for Dermatology, ENT 1 , Ophthalmology & New Hope Oncology Centre New Specialties 51 138 2014 2019A Ophthalmology ENT Dermatology Comprehensive Provider with Ent
Slide 9: One of the Most Reputable Private Healthcare Brands in China
9 9 UFH A B C D E 1.85 1.55 1.53 1.50 1.08 1.48 UFH A B C D E 1.75 1.64 1.55 1.38 1.30 1.38 One of the Most Reputable Private Healthcare Brands in China Ranks top for medical quality among high - end private hospitals by patients, doctors and government regulators Source: Company, Company Analysis 1
Slide 10: Asset Overview
10 10 Operating Stats 4 Open Date 1997/2014 2004 2019 2012 2015 2013 2018 2018 2020 2021 Signed MoU & framework agreement in major Tier 2 locations (lease / operate and management contract model) Gross Floor Area (sqm) 34,448 2 7,559 2 20,844 2 6,900 30,057 3 16,145 69,008 2 28,471 22,834 64,000 # o
Slide 11: 2019 Revenue / Pro-forma Adjusted EBITDA Summary
11 FY2019 Revenue (in million RMB) FY2019 Pro - forma Adjusted EBITDA (in million RMB) 2019 Revenue / Pro - forma Adjusted EBITDA 1 Summary 483 163 161 159 Tier 1 Operating Assets Total 0 HQ Tier 2 Operating & Other Assets Expansion Assets 1,811 359 280 Tier 1 Operating Assets Total Tier 2 Operating
Slide 12: Hospitals: Long Term Maturity Cycle
12 12 Hospitals: Long Term Maturity Cycle 0 50 100 150 200 250 300 350 400 450 500 550 600 650 700 750 800 850 900 950 1,000 1,050 1,100 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 QDU (20,057 sqm 3 ) BJU (24,959 sqm) PXU (previo
Slide 13: Significant White Space for Growth in Tier 1 Cities
13 Significant White Space for Growth in Tier 1 Cities 1 Tier 1 Cities # of UFH Patients 2 ~200,000 Tier 1 Cities Target Addressable Market 3 ~4.1 million Tier 1 Cities Total Resident Population 4 ~ 74 million ~5% ~0.3% Significant white space within Tier 1 Cities for future growth Source: Company A
Slide 14: Q2 2020 Business Highlights
14 14 Shanghai United Family Pudong Hospital Q2 2020 BUSINESS HIGHLIGHTS
Slide 15: Q2 2020 Operational and Financial Snapshot
15 15 Financial Snapshot Outpatient Visit - 23.3 % YoY 40.5 % QoQ 125,723 Visits Inpatient Admission - 23.6 % YoY 0.1 % QoQ Utilization Rate Compared to 37.5 % in 2Q19 32.1 % Operational Snapshot Adjusted EBITDA (before IFRS 16 Adoption) 1 RMB 54.0 mn Total Revenue - 12.6 % YoY 27.4 % QoQ RMB 548.9
Slide 16: Revenue Outperformed 2019 for Consecutive Four Weeks Since Mid July
16 16 Revenue Outperformed 2019 for Consecutive Four Weeks Since Mid July 1/18 2/2 2/17 3/3 3/18 4/2 4/17 5/2 5/17 6/1 6/16 7/1 7/16 7/31 8/15 (1) (1) (0) (0) (0) (0) - 0 0 Last Day of the Week Y - o - y % of 2020 Weekly Revenue Q1 Chinese New Year 2019 Chinese New Year & Wuhan Lock down 1/23 Wuhan
Slide 17: Strong Recovery for Both Local and Expat Patient Base
17 17 Strong Recovery for Both Local and Expat Patient Base 0 % 1 - 62% Feb - 36% - 26% Jan Mar Jul 6% Apr May Jun 6% 10% - 14% 14% Y - o - y % of 2020 Monthly Revenue UFH has reported positive YoY growth for both local and expat population in July 2020 Local (excl. BJM) Local Expat Total Strong l
Slide 18: GZU Broke Even in May and Recorded Positive EBITDA
18 18 GZU Broke Even in May and Recorded Positive EBITDA for Three Consecutive Months After only 21 months of Operations 1 - 2.6% 22.3% Jan 8.9% Feb 3.7% Mar Apr 22.5% May 31.7% Jun 43.5% Jul GZU 2020 Monthly Revenue (Y - o - y%) 2020 Positive EBITDA Notes: 1. Since the hospital obtained its OB lice
Slide 19: Specialty Development: Da Vinci Surgeries & Notable Surgeries
19 19 Specialty Development: 500 Da Vinci Surgeries & Various Notable Surgeries BJU celebrated its 500 Da Vinci surgeries in May Over 10 physicians in BJU have extensive robotic surgery experience in various specialties such as u rology , thyroid, gastrointestinal and gynecology The first caps
Slide 20: Fight Against COVID
20 20 Fight Against COVID - 19 Volunteers in the Mass Testing after the “ Xinfadi ” Cases PCR Lab Approved for COVID Testing Actively participating in the sample collection for over 40K people in Chaoyang district Providing group testing for Fortune 500 Companies UFH is enabled to deliver test
Slide 21: 2020 "618" E-commerce Campaign
21 21 2020 “618” E - commerce Campaign >5x Total GMV Y - o - y 5k Products Sold Total 1 .8m Live Audience 1.5k Products Sold Live No.1 1 No.1 Live GMV 2 in Healthcare Sector 3 No.1 1 618 Healthcare Live Hour List Partnered with Taobao from this successful event and pushed forward strategic initiativ
Slide 22: New Business Model: Corporate Health Clinic
22 22 New Business Model: Corporate Health Clinic Tianchen Clinic Opened inside headquarter of Asia Infrastructure Investment Bank (“AIIB”) for insured covered AIIB employees in April Some service provided under a health management fee arrangement with AIIB and some will be paid by patient or di
Slide 23: Strategic Priorities for 2H 2020
23 Strategic Priorities for 2H 2020 Market Level Organizational Consolidation and Optimization Ramp - up of Newly Opened Facilities (Shanghai Puxi , Shanghai Pudong and Guangzhou) Invest in Core Markets and Expand Capabilities in Selected Specialties Invest in Digital Patient Experience and
Slide 24: Q2 2020 Financial Results
24 24 Shanghai United Family Hospital Q2 2020 FINANCIAL RESULTS
Slide 25: Q2 Revenue Recovered from Q1
25 Q2 Revenue Recovered from Q1 23 43 55 69 74 82 65 89 61 71 79 84 87 83 93 96 64 78 391 429 405 434 435 477 437 462 302 382 507 18 19Q1 18Q1 520 20 18Q2 18Q4 18Q3 19Q2 431 19Q3 604 19Q4 20Q1 20Q2 470 562 577 628 640 549 Operating Tier 1 Operating Tier 2 & Other Assets Expansion Revenue (in million
Slide 26: Outpatient and Inpatient Volume by Segment
26 Outpatient and Inpatient Volume by Segment Outpatient Volume Inpatient Admission 521 291 378 392 446 361 405 1,575 561 514 581 616 528 614 616 451 450 1,612 1,597 1,686 1,687 1,789 1,598 1,850 1,244 1,204 19Q2 37 18Q2 2 18Q1 18Q3 18Q4 19Q1 19Q3 19Q4 20Q1 20Q2 2,096 2,695 2,175 2,148 2,430 2,604 2
Slide 27: ASP Increased in Q2 Due to Higher Acuity Procedures
27 ASP 1 Increased in Q2 Due to Higher Acuity Procedures Outpatient ASP Inpatient ASP 19Q2 92,964 18Q3 18Q1 86,379 87,019 81,965 19Q3 89,755 18Q4 83,932 101,024 18Q2 20Q2 19Q1 86,847 20Q1 79,807 89,969 19Q4 2,390 18Q2 2,226 19Q1 2,267 19Q4 2,240 19Q2 18Q4 2,341 2,383 2,358 18Q1 19Q3 2,640 2,377 2,60
Slide 28: Adjusted and Pro-forma Adjusted EBITDA
28 Adjusted and Pro - forma Adjusted EBITDA 1 Tier 1 Operating Assets Tier 2 Operating and Other Assets Expansion Assets Total 52.8 34.2 5.8 5.8 5.8 1.9 18Q3 18Q2 18Q1 18Q4 50.5 30.9 19Q1 19Q2 - 10.9 54.0 19Q3 25.7 19Q4 20Q1 20Q2 35.9 8.8 36.7 58.6 40.0 27.6 - 67.7 - 24.1 - 37.5 - 60.6 - 63.8 - 43.6
Slide 29: Operating Expenses: Lowered Cost Structure
29 29 Operating Expenses L owered Cost Structure Due to Cost Saving Initiatives 361.3 289.0 20Q2 19Q2 SWB 58% As % of Revenue 53 % Salary, Wages & Benefits (in million RMB) 84.5 69.1 106.2 85.2 103.4 100.7 3.4 - 1.4 19Q2 276.1 - 0.8 20Q2 - 1.8 272.4 Depreciation and Amortization 2 Supplies & Purchas
Slide 30: Strong Balance Sheet and Positive Free Cash Flow in Q2 20
30 Strong Balance Sheet and Positive Free Cash Flow in Q2 2020 Notes: 1. Adjusted operating cash flow is defined as cash generated for operating activities less capital lease payments, adding back i nte rest expense and one - off transaction related costs. See slide 45 for detailed reconciliation 2.
Slide 31: Growth Initiatives
31 31 Qingdao United Family Hospital GROWTH INITIATIVES
Slide 32: Managed Care
32 32 Managed Care Patient is paired with a Primary Care Provider Incentivizes pro - active prevention Aligns the interests of payer, provider and patient I ncentivizes chronic disease management I ncentivizes cost saving with no compromise on quality 1 2 3 4 5 Provider Patient Payer Shared Risk Mod
Slide 33: Enhance Clinic Networks in Existing Markets
33 33 Enhance Clinic Networks in Existing Markets Integrated Healthcare Services Model Generating Significant Synergies. Continue to Replicate Outpatient Networks in Existing Mar kets Significant Referral Revenue from Beijing Clinics (RMB mm) SUCCESSFUL HUB & SPOKE BUSINESS MODEL Source: Company; As
Slide 34: Upside Catalysts Delivering Additional Value
34 34 Upside Catalysts Delivering Additional Value CLEAR SPECIALTY FOCUS Continue deep specialization in select areas but maintain a comprehensive suite of services Grow IVF from Tianjin to nationwide New centers of excellence: oncology, orthopedics, ENT, sleep center, geriatric center, gyneco
Slide 35: Investment Highlights
35 35 Investment Highlights Well - established nationwide platform with scale and an experienced management platform 4 Attractive valuation on a sum - of - the - parts basis 5 Multi - dimensional growth opportunities 6 The leading comprehensive healthcare services provider with the most reputable br
Slide 36: Appendix A - Industry Overview
36 APPENDIX A - INDUSTRY OVERVIEW
Slide 37: Rapid Growth in Demand for Healthcare Services
37 37 REVENUE FOR HEALTHCARE SERVICES IN CHINA - HOSPITALS & PRIMARY CARE (US$ bn) 1 CAGR 13 - 18 (%) CAGR 18 - 23 (%) 22% 11% 21% 9% (US$ bn) 1 42% 58% 59% 59% 59% 60% 62% 41% 41% 41% 40% 38% Rapid Growth in Demand for Healthcare Services 23% 25% CAGR 17 - 23 (%) 20% 22% CAGR 13 - 17 (%) Source: NH
Slide 38: China is Under-penetrated in Private Healthcare
38 38 China is Under - penetrated in Private Healthcare 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 300 700 500 600 900 1,000 1,100 400 1,300 1,200 800 5,300 0 Germany SOUTH AFRICA Spain Private healthcare spending per capita (US$) Taiwan South Korea GDP per capita (US$ ‘000) Canada Japan Un
Slide 39: Top Trends in the Chinese Public and Private Hospital Sectors
39 39 (2,300) ( RMB bn ) Top Trends in the Chinese Public and Private Hospital Sectors Source: Frost & Sullivan, PwC survey on urban middle class Chinese, National Health and Family Planning Commission, Company A nal ysis; As of 2016 SCARCITY AND UNEVEN DISTRIBUTION OF QUALITY MEDICAL RESOURCES IMME
Slide 40: Aging Population and Commercial Healthcare Insurance Are Key Growth Drivers
40 40 25 40 64 103 314 106 139 183 240 483 131 179 247 343 797 90 109 155 212 303 7% 8% 11% 15% 22% 0 200 400 2000A 2010A 2020E 2030E 2040E Population Aged 65+ as % of Total Population Aging Population and Commercial Healthcare Insurance are Key Long - Term Growth Drivers of Healthcare Services 15%
Slide 41: Appendix B - Additional Materials
41 41 APPENDIX B – ADDITIONAL MATERIALS
Slide 42: Summary Shareholder Structure of NFH
42 42 Summary Shareholder Structure 1,2 of NFH 7% 11% 7% 4% 10% 61% New Frontier Group Other Public Investors Vivo Capital Capital Group Fosun UFH Management Free Float (%) ~90 Note : 1 . 131 mm s hares outstanding before accounting for roll - over NFH ESOP from UFH management and SPAC warrants (cur
Slide 43: Management Team of NFH
43 43 Management Team of NFH Roberta Lipson Antony Leung Carl Wu Executive Committee of the Board of Directors ▪ CEO of NFH ▪ Founder of United Family Healthcare ▪ Medical industry experience: 35+ years ▪ One of the most well - regarded healthcare executives in China ▪ Chairman of NFH ▪ Chairman / C
Slide 44: Experienced Board of Directors
44 44 Experienced Board of Directors Independent Non - executive Directors Antony Leung Carl Wu Non - Independent Directors ▪ COO of NFH ▪ Managing Director of New Frontier Group ▪ Blackstone Private Equity Group (HK) ▪ Barclays David Zeng ▪ Chairman of NFH ▪ Chairman / Co - Founder of New Frontier
Slide 45: Strong Cash Flow and Balance Sheet
45 Strong Cash Flow and Balance Sheet Notes: 1. Due to IFRS 16 adoption, capital lease payments is categorized as cash used for financing activities. 2. Maintenance capex is defined as all capex spent for existing operations of the facilities. 3. Expansionary capex is defined as capex spent for buil
Slide 46: Reconciliation of Non-IFRS Financial Measures
46 46 Reconciliation of Non - IFRS Financial Measures Notes: 1. Monitoring fee payable to TPG and Fosun is not related to business operation and is discontinued from 2020 onwards . 2. The adjustments include ( i ) giving a pro forma effect to annual rent reimbursement of approximately RMB15 million