One Health Group (LSE:OHGR) — Investor Presentation

0:00 Good afternoon and welcome to the ONE HEALTH GROUP PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time by the Q and A tab situated in the right hand corner of your screen. Just simply type in your questions and press send. The company may not be in a position to answer every question received during the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to split the following poll. I'd now like to hand you over to Derek Bickerstaff, chairman. Good afternoon to you, sir. Hello. Hello, everyone. Thank you for attending today. We plan to do a general overall presentation of the ONE HEALTH GROUP, but then also present our six month interim figures. So just a a word of introduction, really.

0:46 My name is Derek Bickerstaff. I am the chairman of the and founder of the company. I founded the company some twenty years ago and had a long career as an orthopedic surgeon and knee surgeon. ONE HEALTH GROUP was founded in 2004. So by 2015, I've grown the company as far as I could personally running it, and therefore, we took a a view for to go for strategic growth and therefore brought in Adam to set up his management team to go for growth. So over to you, Adam. Good afternoon. Yeah. My name is Adam Bins. I'm the chief executive of ONE HEALTH GROUP PLC. I joined the business almost six years ago now, Originally as project director to look at building a facility and then going on from that as finance director becoming CEO in July 2019.

1:34 My background isn't healthcare. I've done logistics, manufacturing, and retail in the past, but I think there's many transferable skills which were applied to this business to to good effect. The driver for me over the past six years has been really structuring the business to be more corporate, building on the work that Derek had done previously and that certainly helped a lot when we listed the business last November. Back to you Derek. Okay So a bit about ONE Health to start off with. As I said, ONE Health was established nearly twenty years ago, and almost a year ago to the day, we listed on the apex segment of the Aquis stock exchange. Basically, ONE HEALTH is part of the delivery chain to the NHS, and all our customers do not pay a penny at the point of delivery as per the NHS constitution.

2:27 So we get paid by the NHS, by commissioners who commission our work. So fundamentally, we receive referrals directly from the GP or from trust hospitals that we work with to help them manage their waiting lists. So the patients are referred referred to us, and then they are seen by our subspecialist surgeons, and we see them in community clinics over a wide area in the North Of England and The Midlands. The type of elective surgery that we cover is orthopaedics, spinal surgery, general surgery, and gynecology, And that accounts for the majority of the huge waiting list that we have at the minute in this country with nearly 8,000,000 people waiting to be seen. So our patients are seen in our peripheral clinics. If they require surgery, then we bring them to, at the present, seven independent sector hospitals where we have arrangements with the hospitals to operate the patients, and then the patients are then seen back out in the community where they undergo their rehabilitation.

3:30 So we've tried to flip the provision of health care on its head where we take the subspecialist surgeons out into the community and only bring them into central hubs for surgery when required. So as much of the work is out in the community. So basically, we own the whole pathway of care from referral right the way through to discharge. And with waiting list standing at 8,000,000 presently or nearly 8,000,000, we're seeing a steady increase, a steady demand for our services, which are reflected in the figures that we'll be presenting a little bit later. So the NHS, as we know, is increasing reliance upon the independent sector to provide care. So, you know, ONE HEALTH is an established company. We're asset light. We don't own any we don't have any assets other than our head office.

4:20 We subcontract independent sector hospitals to do operating. We subcontract clinics, and all our all one of our surgeons are all subcontracted. So we're asset light and cash rich. So just a bit on numbers, and we'll we'll we'll delve into these a little bit more later on in the presentation. But roughly each year, HEALTH sees 12,000 new patients. We undertake about 6,000 operations, and we have about 6,000 consultation, which includes follow-up consultations. We have over a 100 NHS surgeons and anesthetists working over a wide area, Yorkshire, Derbyshire, Nottinghamshire, Leicestershire, and Lincolnshire. We work in a number of clinics as stated earlier, around about 30. Now all these are CQC registered clinics. And the reason I I want to raise that is that everything we do is registered by the care quality commission and quite rightly so.

5:20 To do so, however, requires a lot of infrastructure with regards to the fulfilling their regulatory requirements. And this is something that ONE HEALTH has built up really over the last ten to ten to fifteen years. Also, contract we have is something called the Any Qualified Provider contract, which we achieved in 2011. Now this allows us to receive patients with patients to be referred to us by general practitioners from anywhere in the country. Now we see them in our clinics in the North Of England and The Midlands, but because of this contract, we have a very wide reach throughout England. And the important point about that contract is that that that type of contract is now not available. And so the fact that we have a a large infrastructure to deal with the regulatory requirements of the CQC and we have this any qualified provider status, that a relative barrier to entry to other smaller groups.

6:16 So as we'll see later in the presentation, let's say, year end, we achieved our forecast of just over 20,000,000 with one one and 500,000 of EBITDA. I'll just move that through to Adam. Patient choice. Patient choice has been in place literally for almost a decade now, and what it means is that constitutionally, the patient has the right to choose who provides their treatment, not as widely known as you would hope, and I'll come onto an advertising campaign recently to promote that, but in simplistic terms, if a patient attends a GP and then is required to be referred on to a consultant, they should be given the choice by a combination of location and speed of service. So as Drake's touched on briefly, the operating model for ONE HEALTH is based on numerous outreach clinics, which as as the name suggests are out in the community, which I'll come on to later and show you where they are. But also we we work really hard to minimize our lead time for both referrals and for inpatient activity.

7:15 So we feature very highly on this kind of Google search with GP. As a reminder, there's no cost to the patient. All the activity we carry out is fully funded by the NHS. We don't focus on private and self pay. We are an NHS provider. That's key to the the growth of ONE HEALTH GROUP. It's also very important to realize that on a local basis where we operate, we are playing a significant part of reducing that waiting list. As Derek's touched on nearly eight million patients now waiting, we do a lot of work locally and across regions we operate to reduce that list with times two from referral to inpatient of around eight weeks compared to what can be two years for selected procedures in the NHS. On the right hand side of that slide, that pie chart, I'm showing you basically the business model to gross margin level. So as an indication, a hip procedure funded by the NHS, we get paid £6,300.

8:05 We then pay the surgeon per hip replaced, we pay the anaesthetist for helping that consultant, and then we pay a percentage of the tariff to the independent hospital we use to use that hospital capacity to carry out the procedure. That covers all costs of the procedure from initial pre assessment through to discharge. So that makes up the effects of the gross margin of the business, and that's around 18% currently. And there's obviously options on that in the future with the relevant surgical gloves, which I'll come on to. So in terms of the promotion of patient choice, you may or may also have seen in the printed and digital media in September, there was an NHS England funded promotion to let patients know they have a choice. Clearly that was right on half year for us, so we saw no immediate uptick in that activity since, but we're fairly confident more patients are now aware.

8:53 This should be followed by a TV and radio campaign in December, which we hope to be benefiting from towards the second half of the year. Bear with me a sec. So in terms of why patients choose ONE HEALTH GROUP, there are three key points on that slide I'd like to talk to you about. One is the short waiting times. So as I mentioned previously, typically now, we're now at pre pandemic levels of performance. So the average wait time from GP referral to a first appointment with a ONE HEALTH consultant is around four weeks and around six to ten weeks depending on the specialty for surgery if required. Around forty percent of our new patients require surgery, an indication of conversion for you. The second bullet point in there local to patients again is key to being attractive to the patient. Unlike the larger hospitals where all activities carry out in the hospital and the patient may travel five or six times, we focus in the community at first point of contact with all our consultants traveling into the community to our outreach clinics to meet the patients, making it very convenient for them. And then going down the bottom of that slide, patient liaison team.

9:55 So the employed workforce in ONE HEALTH GROUP is around 50 and those that team who sat in my head office today where where I'm basing myself, I have responsibility relationship management between the hospitals, the patients, the commissioners and all the consultants and ethicists. They do a fantastic job of making sure the quality of care is really, really strong and that goes right back to when Derek formed the business nearly twenty years ago. Customer care is at the heart of what we do. I'm going to the last one, it's just the measurement of that quality, our feedback is excellent. I think I'm saying with a great degree of confidence, our patients receive private quality levels of service but obviously it's free funded by the NHS we take great pride in that. In terms of our operating locations, this slide up in terms of the colors on there what you'll see is the small blue dots are where we have outreach clinics today. That's the, again to remind you, that's where the consultant travels to, to meet the patient for the first consultation.

10:51 Should the patient then need any surgery or inpatient activity, they're charged with one of the orange dots. Again, that's around forty percent of our new patients. Those orange dots are currently independent hospitals, generally part of large groups like Circle and Spire, but also independents in their own right as well. That's where we carry out the surgery. The large black dots are regions we've highlighted where there's heavy reliance on NHS provision, but also an under provision in terms of surgical capacity, be that NHS or other independent hospitals, so regions that are key for provision of surgical hubs to support inpatient activity, that being surgery. Back to you, Gary. Derek, you're on mute, Derek. There we go. Sorry. So, basically, operational overview.

11:43 The this company relies on number of patients, the number of patients that need to be seen, do we have enough surgeons to operate on those patients, do we have enough facilities to be able to operate on those patients. So first of all, if we look at patient demand, as we mentioned earlier, the waiting list is at is at nearly 8,000,000, and we are seeing a steady increase in the number of patients who have been referred to us. And over the last year, we've seen a twelve percent increase in demand. And this has been going on for years. This is how ONE HEALTH has been growing organically over so many years. In addition, the use of the independent sector to provide elective care is supported by both political parties, and particularly so at the Labour Party with some pronouncements from from West Reading.

12:29 So we continue to to see more patients. As we grow our geography, as as I mentioned, we're at the top of now, we're at the bottom going down to Leicestershire, and we will continue growing north and south from there. As we grow, we just simply grow into a bigger pool of patients to be referred to us. Whereas so traditionally, or certainly since 2012, ONE HEALTH has received its patients from with direct referral from the GP. But what we're finding now is that some trust hospitals have such a demand on their services that they cannot cope with the number of patients that they have on their waiting list. So we also supply them supply the hospitals with a solution to that where refer to us their excess waiting list their waiting list patients.

13:15 So this, over the last six months, we've now contracted with two further trust hospitals, Barnsley and Derby and Burton hospitals for the provision of mainly orthopedic care. And that goes that's now four hospitals that we're providing this care for. So we don't see any problem in this demand. With waiting lists so high, there appears to be no problem with regards to getting patients to see us. How about surgeons? Well, we work in areas where there is low private practice. We don't work in affluent areas. Most of our work are in more rural areas where there's under provision of of health care. So as an example, in in in Rotherham, say, around about 6% of people have private insure insurance, whereas in areas of Surrey, it might be 90%.

14:08 So so there's not a lot of private practice. So there are lots of surgeons with lots of free time to spend working on NHS patients in their private time, if you like, rather than private patients. So we are constantly attracting patients. We've we've contracted with a further 15 patients recently. And at board, we always review our pipeline of surgeons that are joining us, and we have roughly around about 30 patients who are in the pipe sorry, 30 consultants who are in the pipeline to join us. And, again, as we increase your geography, we simply increase and we simply widen the pool of surgeons to come to to come to work with us. And we're attractive because, basically, we do what to do for surgeons, what they want to do. They want to sit in clinics and they want to operate. They don't want to be bothered with all the administrative hassle of providing a health practice, and that's what we're able to do.

15:03 And in particular, we're noticing a growth in spinal practice. So we're not seeing a problem with surgeon availability. We're not seeing any difficulty. Another point I might make is that lots of surgeons have formed themselves into little liability, little LLPs, want and wanting to do what ONE HEALTH does. But without the infrastructure with regards to regulatory requirements, without the contracts that they have with the NHS, they find they can't, and therefore these groups will join us. So we do not foresee a problem getting surgeons. So with regards to capacity, again, our capacity is constantly being increased. We are adding new independent sector hospitals, and we are in and in those that we're working with, we are increasing the amount of work that we do within those hospital staff. We have a couple of hospitals we work with where we're we're within we're about 40 to 50% of the turnover of that hospital.

16:01 There are, however, areas in the country as I say, we work mainly in rural areas where there's poor provision of health care. There are areas in the country where there's both a shortage of NHS and independent sector provision. And in those areas, they're the places that we're we're planning to drop in one of these surgical hubs so that our patients don't have to travel too far. So we'll continue to work with the independent sector. It's a very flexible and and mobile model, but there are certain areas where both fail, and it's in those areas that we plan to drop our our hub stuff. And increasingly, we're we're we're noticing that trust hospitals are coming back to us to ask if we can use an insourcing model so that we can take some of their spare capacity.

16:47 So we have the independent sector. We have our own hub program, and we also have the potential to do insourcing in trust hospital stuff. And as we grow, we increase our clinics, we increase our number of operations that we're able to do, we are still maintaining a waiting time of some six to twelve weeks. So a bit more on the surgical hubs. Now the first thing to say is these are not hospitals. We do not need a hospital as you may think of a hospital. All our work is done out in the community, all our consultations, all our diagnostics, all our rehabilitation. The only thing we need need is an operating theatre and beds. So these are really stripped down surgical facilities.

17:36 We plan to open two of these over the next three years. We have one that's going through preplanning at the minute. This is a mock up of that facility. You'll see on the towards the near side, that is actually a nursing home. We are are not running the nursing home. We're doing this in partnership with a nursing home provider. We are not building this ourselves. We're not builders. We're surgeons. So we are also working with a builder who who is building the nursing home and indeed is company that lies within the nursing home. So within that so the far end of this picture you'll see is our surgical facility and that's one theater and 12 operating operating sorry. One theater and 12 beds. So the type of work we'll be putting through this is high tariff work, hip replacement, knee replacement, and certain types of spinal surgery.

18:31 And because we're doing limited surgeries in these hospitals, we are very efficient and very productive. So we would plan to do, say, six joint replacements a day, whereas because of various constraints within the NHS, only two or three may be may be performed in a day. So we these will be highly productive facilities, which is exactly what the the government is wanting. Indeed indeed, the growth of surgical hubs is something that's supported by the government and is also supported by the colleges of surgeons. So we've identified as Adam said, we've identified areas where we would like to build these. The first one we have has gone through preplanning. We would hope to go for planning shortly. As to the cost, well, the the the cost is roughly million. It will vary depending upon on on land and the planning or what have you, but around about 7,000,000.

19:21 And through this, we believe we'll be able to deliver 6,000,000 of revenue and 2,000,000 of profits. And as I said, these areas are focused on where there is we know there is demand. So we're not going to open a hospital and then wait for the patients to come. We're actually dropping one of these hubs in areas where we know already there is demand. We're seeing patients there already. So we will be able to start prebooking patients into this for about into our new facility from three to six months out. So we won't be waiting. And the other important point to make is this these the patients who will be going here are not patients that have been moved from other hospitals where we're working. This is additional capacity for an additional patient. This is the current operation.

20:12 You'll remember this pie chart from an earlier slide. So on the left hand side is is how we do things today, where we pay a percentage of the tariff to the hospital, we pay the theatre staff, and we we generate a margin. On the right hand side is the same pie chart but the shaded area is effectively the margin we pay to the hospital today, independent hospital today that we'll internalize. So in very very simple terms we make our own 18% gross margin today that'll increase by 12% to around 30% very round numbers based on specialty and mix. So you can see the benefit financially of having owned theatre capacity. The other benefit of this longer term and something we don't do today is the ability to do our own self pay. It's a highly competitive environment you'll probably appreciate most private hospitals compete primarily for private works it's so lucrative but with a very efficient model that we will have in place with the hubs we're able to undercut where required to achieve our own self pay and ultimately private medical insurance as well subject to accreditation which shouldn't be too challenging. So it's a very efficient no frills solution with us being able to pass on that benefit to the patients ultimately.

21:15 So on to some statistics. So this is half year to half year so effectively key operational metrics for us at half year this year versus last year. You can see there's some nice growth across the board there's nothing negative in those KPIs, I'm very pleased to say. So new patient referrals up twelve percent, number of surgical procedures that's inpatient activity up seven percent, Number of consultations, that's a combination of new and follow-up, again up ten percent. New consultants, key to growth, we brought in 10 in the first half of the year, very, very pleased with that number, and reflects the change in the way things are working where before we'd have to chase and pursue, now we're approached on a regular basis. That also means of course we can be very selective. We're able to pick the best, the safest, most efficient, and the most productive to come and join us.

22:02 Number of our clinics is constantly under review, that sits at 31 today, but we're always looking for areas where there's under provision, where we can put in a clinic and attract that first point of contact with the patient, to then feed the surgical capacity further down the line. And a key growth area which Derek's touched already that's happened since COVID, is the number of trusts approaching us directed to bring in patients from their waiting lists into ONE HEALTH. So they've been to the GP already, been referred to the trust on their waiting list, then come into ONE HEALTH GROUP, transferred out by the trust. The feedback we're getting on that provision is excellent, it really is, and we see more on the back of that. So that's really a second avenue for patients to join ONE HEALTH beyond the traditional GP referral through ERS. So we had a very positive set of metrics I would say across the board for the first half of the year.

22:50 In terms of the outlook, very clearly delivering surgical hubs in future years will boost growth and margins. To repeat Derek's point, this isn't moving patients into, this is new patients, new margin, new growth. We will, course, continue to develop our organic growth, and we constantly find more capacity in private hospitals. Derek said a second ago, one of our biggest providers, we we represent pretty fortunate to their turnover. They've just developed their facility and now brings more capacity in the same site, as well as new sites we're finding as well, and we've got one coming on stream in January, a brand new site we've not been in before. So that organic growth will continue as well as strategic strategic growth we hope development in '25 and '26. As always, we have a progressive dividend policy. We we pay healthy dividends both interim and final, and there's no plans to change that going forward. It's a key part of our offering.

23:38 And probably the most important point, the biggest change since sort of 2019 is the change in political view of what we do. I think it's fair to say that both parties have demonstrated openly. I don't know if anyone watched Laura Kunsberg this weekend, but both Labour and Conservatives and even Lib Dems now talking about the benefits independent sector can bring to driving down that waiting list, which one of which is your next key priorities at the end of this year. Well, this so back to you, Darren. Okay. So who are our competitors? Well, clearly, one might think the NHS is a competitor, but we do not look polite like that. This isn't an adversarial approach. We believe what we're doing is highly highly allied with what the NHS wants to do. So we're not a competitor. In fact, we look upon them as colleagues, and we work together to try and deliver patients' patient operations to decrease the waiting list. So we work well with a number of NHS organizations, both the commissioners through the inter integrated care board and also through trust hospitals as Adam has just explained.

24:49 Local hospitals, one might consider that we're competing with them, but we have a completely different business model. Our business model is to support the NHS. Private hospital business model is primarily for the higher paying private medical insurance and self pay models. And they will have a proportion of beds that are are spare, that they can't bring the high tariff patients through, and they're the type of beds that they offer to us. They could bring NHS patients into the into those beds themselves, and they do, but we're able to prepackage large numbers of patients in advance, and it's just easier for them to do it with us. So we don't compete with them because we don't do private practice. We're not gonna we we we don't do private medical insurance or self pay. Although when we get our hubs, there may be a limited self pay offering.

25:42 So at we don't see them as competitors. We see them as as partners. Are there any other organizations out there that look like us? Well, we've not really been able to identify one. There there was actually a similar one called Pioneer, which we bought by Totally about two years ago. But Pioneer had a different model to us. They had an insourcing model, which was similar to the model that Totally had, whereas ours is more of an outsourcing model. So we're not aware of any groups of our size that work in the type of area that we work with the type of contracts that we have. As I mentioned earlier, there are lots of surgeons who bring themselves together into small administrative groups forming a limited liability partnership.

26:28 But they haven't got the contracts, they haven't got the regulatory requirements, and so we get them inquiring to join us. We've had two groups recently join us, a group of neurosurgeons and a group of orthopedic surgeons. I spoke to a group of urologists in the Northeast who wanted to speak to us to find out what we're doing. So we're constant and Adam has a similar approaches. We're constantly approached by groups of surgeons who try to do what we do, find they can't, and therefore join us. So, Adam, over to you. Thanks, Derek. So to anybody who's not come across ONE HEALTH before, I'm gonna show you two sets of results. Obviously, interims as part of today's presentation, but also to reflect really on our last full year, that being 2223. I'll take you the headlines on that as well. So starting with full year 2223, again, showing a consistent growth from '22 through '23.

27:21 Revenue, EBITDA, EPS, all up. I think it's fair to say to what I'm trying show you is kind of consistent growth rather than just a one off in this half year. So you'll also see a common theme there to the net cash balance. As Doug touched on the very first slide, we generate a lot of cash. So year on year, we continue to grow cash and certainly this year, we're at 3,640,000 a half year, which funds not only dividend but also future investment and that includes surgical hubs. So bringing forward bang up to date, so in terms of the interims that we've released this morning at 07:00. So as with the key metrics, everything's positive, nothing's negative. Strong revenue growth again, gross profit underlying EBITDA, cash at £3,640,000 as I touched on. We're declaring a higher interim dividend than last year so that's rebalancing but net net it's an increase on last year so we continue to pay increasing dividends starting with interim which we paid in January.

28:18 Also kind of the lifeblood of ONE HEALTH GROUP the new patient referrals there nearly 6,100 up 12% these are almost record numbers for ONE HEALTH GROUP so that is effectively funding future inpatient activity. Remember I said before that forty percent of our new patients convert to surgery a strong new patient number today in eight weeks is a strong inpatient number going forward so strong numbers across the board and that's really where me and my team focus on is getting more new patients, more locations, more geography, more capacity to keep that inpatient revenue growing over time. So that's really the organic growth for business in the last six months. Beyond that, we'll talk about strategic growth which we've done already with the development of hubs. Back to you, Dave. Okay. So in summary, ONE HEALTH is part of the supply of the NHS supply chain, providing elective surgical services which is all free at the point of delivery.

29:15 We see our patients directly from referral from the GP through patient choice, but increasingly we're also getting patients referred to us by hospitals. We are popular. We see patients nearer to their home with very short waiting list for surgery, And so it's not surprising that we get lots of referrals through the ERS system, the electronic referral system. The waiting times for us are far shorter than any NHS Trust hospitals. And importantly, we care for the patients right through the clinical pathway. So we care for them from the delivery of the from the referral to the patient through to us, right through any conservative or operative treatments throughout the rehabilitation and then discharged back to the GP. Our business model is light. We are we subcontract clinics and theaters, and so it's nimble and flexible and takes advantage of local facilities as we grow. And we've explained to you how that we've increased the number of the the number the amount of capacity we get at independent sector hospitals, we are constantly getting more hospitals as we grow our geography.

30:21 However, with the addition of these these surgical hubs where there is a lack of capacity, we could further increase our rate of growth. So we are asset light, cash generative with growing revenues and profits and have a progressive dividend program. We're projecting a compound annual growth rate for the next five years of up to 40% per annum with two surgical hubs projected for 2025 and 2026. So we feel we're in the sweet spot at the minute with regards to the health market. The NHS is in turmoil, waiting list to grow in. There are demands for restructuring. The political parties are supporting the independent sector in helping deal with the waiting list, and we can do that through increased productivity.

31:10 So we only see it or foresee a growing demand for our services over the coming years. Thank you very much. Derek, Adam, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab, is situated on the top right hand corner of your screen. Just while the company take a few moments to view these questions submitted today, I'd like to remind you that recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboard. As you can see, we've received a number of questions throughout today's presentation. Adam, if I could just hand over to you just to share the q and a. I'll pick up from you at the end. Okay. No problem. A very early question presentation. We were asked, Derek, as you as you two, as you expand, particularly with the planned addition of clinicians and surgical hubs, what is the expected impact on the company's operational costs and overall financial health?

32:02 I'd like to think we've answered that as part of the presentation as we work through it. So you will have seen that a lot of our costs are variable. So as we grow with more clinicians, because it's a variable model, it only costs us per procedure they carry out. So it's not like a fixed overhead where we need to recover that cost. Hopes admittedly are different. They they will they will cost the business. We've got several hopes lined up over the next sort of four to five years, but certainly two in '25 and '26, one in each year. We expect to fund that through a combination of free cash. You mentioned I mentioned a while ago that we got £3,600,000 a half year, and that will be higher by end of year. So cash, loan, and tech maybe to fill the gap after a lease potential, a small raise to fill the gap. So we remain confident that any hope itself is self funding.

32:48 As Derek's touched on, they generate around £6,000,000 of revenue and £2,000,000 of EBITDA. I would suggest quite a good return on the on the initial investment to build or acquire that. The other thing we we should highlight is that we haven't ruled out any acquisitions, not mentioned in the slide pack, but it should we come across an appropriate facility that happens to be for sale at the right price that matches our strategy in terms of being an area where there's under provision. We wouldn't rule out an acquisition as well as build and modifying existing buildings. So that that's kind of part of the strategic growth. Any comments on that, Derek? No. I think that you've answered that fully, Adam. And there are no more questions at this point. Does anybody have any I can see another question there, Adam, which I think is a question for you. Oh, pardon. Apologies. Yes.

33:38 Steve from David s. I can see that now. Yeah. So do you see the rates of growth around 48% at EBITDA level sustainable? What has driven this, and what visibility do you have going forward? So in terms of financial planning, we we see continued organic growth. We see no challenge around that. The step change is the surgical hubs as we talked about. So EBITDA will take a step change through development of hubs. The EBITDA year on year doesn't necessarily reflect underlying performance because within last year's half year, we started to pick up costs of the IPO, which happened in November 22. So the EBITDA was impacted by that. So we haven't got that cost this year. The underlying EBITDA for this half year is clean, no adjustments, and probably better representation going forward.

34:26 On to the next question, how are you navigating the regulatory environment, particularly concerning health care policies and compliance requirements? Are there any anticipated changes that could impact the group's operations? That's pretty one for you, Derek. Sorry. Let me read that. How you're a regulator requires yeah. Yeah. We we keep up to date with any any compliance changes and any reg reg reg change in regulatory requirements. We actually have a very robust infrastructure to to be able to deal with this, and we have a very strong board, including nonexecutives that that can deal with this. So we have not anticipate that this has been going on for the for the last twelve, fifteen years with increasing regulatory control.

35:12 And it's something because of our infrastructure that we're able to keep keep anticipating and keep in advance. An example of that was a recent paper that we had to produce to explain our carbon footprint and what we were doing to bring down the carbon footprint. That was a considerable amount of work, but because of the infrastructure we had, we were able to deal with that without any undue problem, without taking too much time out of Adam and his senior team, basically, which is basically seeing more patients, doing more operations. So we're comfortable that we're able to cope with any changing regular regulatory requirements in the NHS. Okay. So the the comparison from consultations to operations there, one of the questions. So you had one that 15,311 consultations to make two thousand nine ninety seven operations as is normal. The consultations number includes follow ups as well, which are postoperative.

36:11 So the real measure, if you like, is the new patients to operations, which I mentioned before is around forty percent conversion. So I think that I hope that answers the question. The consultation high number includes consultations after they've had operations. So it's new to inpatient is the real measure for us. It's around forty percent. And that's and that's quite normal in surgery. Surgeons love to operate and it would be they would love it if every patient they see had been worked up so comprehensively that they all needed an operation, but that's not the real world. So whereas GPs and physios do their best to work patients up, there are always a proportion of patients that when it comes down to it, having a full and frank consultation, it's best that they carry on with conservative measures rather than have an operation.

36:58 So even at best where patients are triaged extremely well, the figure will probably only get up to about sixty, seventy percent. So it's not unusual to have that sort of gap between referrals and those going for surgery. Just to answer Paul specifically on that one, you go back to the slide 16, the new patient referrals 6094, surgical operations three thousand, that's almost fiftyfifty, so that's a better representation of the conversion to surgery. That's actually quite high, but some of that will be like from last year as well, bear in mind. It's a constant moving number because we're seeing patients last year and treating them inpatient this year. So forty percent to fifty percent will always be and has always been for a long time kind of the benchmark number. So one from Christopher t. How important is technology to your strategy? What investment is planned here? That's a really good question, Christopher. So we are, I would say, almost unique in the fact that our outpatient experience for for a patient is is totally paper free. All our systems are based on either a tablet or or a laptop.

38:03 So technology is very, very important to us. Equally technology technology enforcing our security. Clearly, deal with most sensitive data in the country, that being patient records. GDPR is very, very hard on our agenda, and we talk about every board to make sure we're safe. So we're constantly embracing technology to make sure a, we deliver a better service to the patient, the end user, our customer, but also security and data safety in in our building is is really important. So we we're constantly looking at different providers, making sure our providers are fit for purpose given the increasing demands of of modern society. But investment, yes, is it plays a strong part in the way we deliver our model and makes us much more efficient. Another good example sorry, just thinking about it out loud now so a while ago we were submitting around twenty seven twenty eight thousand piece of paper to patients a year that being letters say your appointment, your follow-up, your inpatient consultation we moved to hybrid mail around six years ago five years ago sorry and saved around £40,000 in post tube paper so now the system whereby when one of our team out front of house here sends a notification to a patient to do text, email and electronic mail so there's no envelope stuffing anymore, which they used to be.

39:13 And just a further point on that as well with regards to surgery, I mean surgery, particularly orthopedic and spinal surgery is constantly evolving with it with with the technology. So these hubs that we will be building will be up to up to speed, up to date with the latest advances. So we'll have very efficient, very productive theaters. You may be aware of robotic surgery or computer navigated surgery. Well, we work with companies that provide this type of this type of technology. So we will always remain at the cutting edge of surgical technology. Okay. An extra, I think it's all ready, but I'll I'll save it again for the for the benefit of anybody who missed it. How How are you going to fund the hubs? As I mentioned before, we we we are quite cash generative. We set a lot of cash, which is currently on deposit account, earning around 3%.

40:03 So we'll use cash first. We've then got a very friendly bank who so to just give you some dynamics on that. So we own the building within which we operate, which is our head office effectively, Dodokshire and Sheffield. Value is about 2,600,000 market value. We've got just over 1,000,000 load against that, So our bank is very keen to lend a headroom against that. But also, our bank is very keen on our growth strategy and is prepared to lend multiple times that to help fund the hubs. So it'll be predominantly cash or sorry. Primary, first of all, then loan, also looking at leasing with a couple of leasing businesses and potentially a share raise as well. But that's kind of fourth in that order of events. It's not straight to a raise and see how we get on. Last question so far is will the NHS allow you to make 30% hoped for margin on new hubs? Can they change the rate card? That's a very good question. So the rate card for anybody who's not in the sector it's based on what it costs an NHS trust to carry out the activity divided by a number of activities. So the rate card has been in place, I think, Derek, correct me if I'm wrong, for around eleven years.

41:11 Yep. You tweak every year slightly to reflect inflation. So a really good example of that would be the recent industrial action with the nurses, which was settled. Clearly, the consultants are potentially settled or going to be voted on for settlement. Jury doctors still outstanding, but going back to where we started, the nurses was the first strike we we experienced. Once they settled, the tariff or rate card as you refer to it was increased to reflect that inflation and we benefited from that directly because our cost didn't increase. So it's not a case of the NHS allowing us to make 30%. We're all paid the same. Difference with ONE Health we're extremely efficient more efficient we are the more margin we generate and ultimately it's about treating patients it's hard to criticize a business that's seen 12,000 patients a year and put them back into good health rather than waiting list. So we've not been challenged yet on margin and it's accepted that we are efficient and we deliver a good service.

42:05 I think that's all the questions. It's empty at the moment unless they're last minute questions. I'd like to thank you for attending. Derek and I appreciate your time. And hopefully, we'll see you again on this platform either at year end trading update or year end results. Thank you for your time. Perfect. Derek Derek, Adam, thanks for updating investors today. Could I please ask investors not to close the session as you now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations? This will then take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of ONE HEALTH GROUP PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all.