EMIS Group plc 2015 final results presentation Introduction & - - PowerPoint PPT Presentation

EMIS Group plc

2015 final results presentation

Introduction & Agenda

Introduction Chris Spencer Financial review Peter Southby Operational review Chris Spencer Summary and outlook Chris Spencer

2

Overview – another strong year for EMIS Group

• Major provider of UK healthcare software, information technology and related services
• Strong revenue visibility, order book and pipeline - 20% growth in recurring revenue
• Maintained or grown already strong market share in every major area of healthcare: Primary &

Community, Community Pharmacy and Secondary & Specialist

• Clinical software businesses rebranded as EMIS Health - simplifies branding message and

emphasises strategic commitment to integrated solutions helping connect care

• Can facilitate the NHS’s connected care strategy across every major UK healthcare setting through
• rganic growth, partnering or acquisition
• In a unique position

3

Peter Southby

Chief Financial Officer EMIS Group

4

Financial highlights

1 Excludes impairment charges, release of contingent acquisition consideration, capitalisation and amortisation of development costs and amortisation of acquired intangibles. EPS calculations also adjust for related tax and non-controlling interest impact. 2 Stated after deduction of capitalised development costs of £6.2m (2014: £6.5m).

Results in line with the Board’s expectations

• Positive contribution from organic growth and acquisitions

Total revenue

£155.9m

+ 13% (organic 5%)

2014: £137.6m

Recurring revenue

£123.0m

+ 20% (organic 8%)

2014: £102.7m

Adjusted group

• perating profit1

£36.6m

+ 12% (organic 7%)

2014: £32.6m

Reported: £11.4m (2014: £29.1m)

Cash generated from operations2

£36.5m

• 5%

2014: £38.3m

Net debt

£9.1m

• £2.7m

2014: £11.8m

Adjusted EPS1

45.3p

+ 15%

2014: 39.5p

Reported: 7.1p (2014: 35.3p)

Total dividend

21.2p

+ 15%

2014: 18.4p

Including final dividend of 10.6p (2014: 9.2p)

5

Financial review - income statement

• Revenue increase driven by acquisitions and community, children’s and mental health (CCMH) wins - total
• rganic increase 5% despite lower EMIS Web for GP roll-out related revenues.
• Adjusted operating profit up by 12% - 7% organic.
• Exceptionals in H2 2015 relate to impairment charges for Secondary Care business (£16.2m) and minority

investment in Pharmacy2U (£2.3m). In 2014, credit reflects release of contingent acquisition consideration.

• 2015 effective tax rate 20.2%.

£m H1 H2 FY FY % 2015 2015 2015 2014 change Revenue 77.8 78.1 155.9 137.6 13% Adjusted operating profit 16.9 19.7 36.6 32.6 12% Capitalised development costs 3.1 3.1 6.2 6.5 Amortisation – development costs (3.0) (3.3) (6.3) (4.7) Amortisation – acquired intangibles (3.2) (3.3) (6.5) (6.2) Finance costs (0.2) (0.3) (0.5) (0.5) Exceptionals/other

• (18.6)

(18.6) 0.8 Profit before tax 13.6 (2.7) 10.9 28.5 Tax (2.8) (2.8) (5.6) (5.7) Non-controlling interest (0.4) (0.4) (0.8) (0.7) Earnings 10.4 (5.9) 4.5 22.1 Adjusted EPS 20.5p 24.8p 45.3p 39.5p 15% Reported EPS 16.6p (9.5p) 7.2p 35.3p 6

Financial review - organic/acquisitions income statement

• Consistent organic growth with strong focus on cost complemented by strategic bolt-on acquisitions.

1 Includes results from acquisitions of Indigo 4 (July 2014), Medical Imaging (December 2014) and Pinbellcom (July 2015). £m Organic Organic Organic % Acquisitions Acquisitions 2015 2014 Increase 20151 20141 Revenue 142.2 136.0 5% 13.7 1.6 Recurring revenue 110.1 101.6 8% 12.9 1.1 Cost of sales (12.9) (12.7) 2%

• (0.1)

Staff costs (including capitalised development costs) (67.6) (64.1) 5% (6.1) (1.0) Other operating expenses (18.8) (18.8)

• (5.4)

(0.1) Contract asset depreciation (3.2) (3.8)

• 16%
• Depreciation/amortisation of software used

internally (5.1) (4.4) 29% (0.2)

• Adjusted operating profit

34.6 32.2 7% 2.0 0.4 Development costs capitalised 6.2 6.5

• 5%
• Amortisation of development costs

(6.3) (4.7) 47%

• Amortisation of acquired intangibles

(5.6) (6.0)

• 11%

(0.9) (0.2) Operating profit (pre-exceptional items) 28.9 28.0 3% 1.1 0.2

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Financial review - segmental analysis

• Primary & Community Care growth driven by new contracts in community, children’s and

mental health (CCMH) and by completion of EMIS Web GP roll-out in England and Wales.

• Community Pharmacy growth supporting investment in new ProScript Connect product for

launch later this year.

• Secondary & Specialist Care has grown profit despite challenging period for Secondary.
• Margin improvement in organic business and more to come from Secondary & Specialist.

£m

2015 2014

Primary & Community Care Community Pharmacy Secondary & Specialist Care Total Primary & Community Care Community Pharmacy Secondary & Specialist Care Total

Revenue 93.9 20.0 42.0 155.9 89.7 18.4 29.5 137.6 Recurring revenue 77.3 16.6 29.1 123.0 69.6 15.3 17.8 102.7 Adjusted segmental profit 29.6 4.3 4.2 38.1 26.4 3.9 3.4 33.7 Group costs (1.5) (1.1) Adjusted operating profit 36.6 32.6 Adjusted operating margin

31.5% 21.2% 10.0% 23.4% 29.5% 21.0% 11.6% 23.7% Development costs capitalised 3.1 1.0 2.1 6.2 4.0 0.8 1.8 6.6 Amortisation of development costs (5.4)

• (0.9)

(6.3) (4.3)

• (0.4)

(4.7) Amortisation of acquired intangible assets (0.9) (0.6) (5.0) (6.5) (1.1) (0.7) (4.4) (6.2)

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Financial review - revenue analysis

• Good visibility through recurring revenue growth of £20.3m – organic £8.5m,

acquisitions £11.8m.

• Acquisitions impact mainly other support services (Medical Imaging).
• Achieving full EMIS Web roll-out in England and Wales results in lower

training/consultancy/implementation revenues. £m

Nature

2015 2014 Licences

mainly recurring

50.3 43.8 Maintenance and software support

recurring

37.9 33.4 Other support services

mainly recurring

30.6 21.6 Training/consultancy/implementation

non-recurring

16.1 16.9 Hosting

recurring

13.1 14.0 Hardware

non-recurring

7.9 7.9 Total 155.9 137.6 Recurring 123.0 102.7 Non-recurring 32.9 34.9 Total 155.9 137.6 9

Financial review - cash flow

• Cash from operations at £36.5m, slightly down on 2014
• Working capital outflows in particular:
• Reduction in creditors (£2.5m one off supplier

balances and £1.1m bonus accrual at end of 2014 not repeated in 2015)

• Reduction in deferred income (£2.6m net release

to revenue for funded hosting assets (offset by lower CapEx) and £1.3m release for Defence licences paid in advance)

• Increase in debtors (£0.8m growth in CCMH,

£0.5m timing of GPSoC payments)

• Business combinations:
• Final Ascribe earnout payment (£2.25m)
• Pinbellcom (£3.0m)
• Capex includes:
• Secondary Care office fit out (£1.6m)
• Other property improvements (£1.5m)
• Computer equipment (£2.9m)
• ERP system (£1.3m)
• Other includes £2.1m minority shareholder dividend

£m 2015 2014 Operating profit 11.4 29.1 Depreciation and amortisation 21.3 19.0 Impairment charges 18.5

• Release of contingent acquisition

consideration

• (0.9)

Working capital (9.2) (2.7) Share based payments 0.7 0.3 Cash flow from operating activities 42.7 44.8 Development costs capitalised (6.2) (6.5) Cash from operations 36.5 38.3 Business combinations (5.2) (10.3) Net capital expenditure (7.2) (8.3) Transactions in own shares 0.6 (1.5) Tax (6.9) (5.2) Dividends (12.4) (10.8) Other (2.7) (0.5) Change in net debt 2.7 1.7 Closing net debt (9.1) (11.8) 10

Financial review - balance sheet

• Strong balance sheet maintained after

impairment charges, with low gearing (£4.7m in cash / £13.8m debt).

• Bank facilities secured to 2017 (£22.0m

Term/RCF/overdraft).

• Deferred income provides good revenue

visibility.

• Contingent consideration is for Medical

Imaging.

• Cost of final dividend £6.7m.

£m 2015 2014 Goodwill 54.4 68.6 Acquired intangible assets 42.6 47.3 Development costs 21.2 21.4 Property, plant and equipment and computer software used internally 25.2 26.5 Associate, JV and other current assets 35.2 32.9 Deferred income (28.0) (30.0) Contingent consideration (3.0) (5.3) Other current liabilities (20.9) (22.0) Deferred tax (10.5) (12.7) Net debt (9.1) (11.8) Net assets 107.1 114.9 11

Financial review - financial guidance and trends

Acquisitions

• Pinbellcom acquired July 2015 for net £3.0m cash consideration and with last financial year revenues of £1.2m and

profit of £0.4m.

Contract assets

• Revenue and related depreciation expected to remain broadly level in 2016 (subject to timing of CapEx).

Staff costs

• Redundancy costs taken in H1 with benefit accruing in H2.

Share-based payments

• Charge increasing into 2016 with recent awards.

Tax rate

• Expected to remain close to UK statutory rate.

Development costs

• Expect capitalisation and amortisation to continue to be broadly equal.

Capital expenditure

• Expect 2016 to be higher with an increase in funded hosting CapEx.

Working capital

• Some expansion with business growth, but at lower levels than seen in 2015.

Dividends

• Progressive dividend policy maintained with growth tracking EPS.

12

13

Chris Spencer

Chief Executive Officer EMIS Group

13

EMIS Health Primary Care

Revenue up 5%, adjusted operating profit up 12% Strong financial performance:

• Loyal customers:
• 74% of Group’s English GP practices used

an EMIS Health system for over 10 years

• Clear market leader:
• market share rose again to 55%
• 21% of CCGs now 100% EMIS Health

Primary Care

• Secure funding:
• GPSoC funding in place
• Lot 3 successfully concluded supporting

connected care strategy

• EMIS Web roll-out increases revenue and

mobilises data:

• England and Wales – complete
• Northern Ireland – in preparation
• Scotland – in prospect
• Patient Access an NHS priority:
• enabled by 99% of all GP practices
• revenue generating
• benefits to NHS being realised
• innovation ongoing

14

EMIS Health Community, Children’s and Mental Health

Market share up to 12%, contract wins of over £10m

• Market share growth to 12% - significantly ahead of 10%

target - 2016 target 15%

• Implementing wins
• NME 180 CCMH opportunities ongoing
• CSC “North, Midlands and East” National Programme

contract re-procurement includes circa 180 opportunities

• USP is connected care across EMIS Health:
• delivering faster, better, cheaper care
• already sole supplier across primary care and CCMH in
• ver 10% of CCGs
• Total contract value of wins in 2015 in excess of £10m
• Recent wins include (from):
• East Lancashire Hospitals NHS Trust (CSC/iSoft)
• Trafford CCG (Civica)
• Central Manchester Foundation Trust (CSC/iSoft)
• Pennine Acute Hospitals NHS Trust (CSC/iSoft)
• Southport & Ormskirk Hospitals NHS Trust (CSC/iSoft)
• Blackpool Teaching Hospitals NHS Foundation Trust

(extension to existing contract)

• Bristol Community Health CIC (extension to existing

contract)

• South Tyneside NHS Trust (TPP)
• Stockport NHS Foundation Trust (extension to existing

contract)

• Strong and growing pipeline

15

Patient and Egton

Patient

• Helps patients proactively manage their own care - key

part of UK healthcare strategy

• Improved global reach through move to top level domain:
• international now nearly 70% of visits
• Monthly traffic increasing:
• 13m unique visitors, 25m page views
• Exploring engagement strategies and monetisation beyond

advertising

• Recruitment of digital leader underway

Egton

• Non-clinical ICT solutions and services
• Pinbellcom purchased:
• adds intranet administration and compliance platform
• complements existing GP non-clinical offerings
• rebranded as Egton Digital:
• administration/compliance software for primary and secondary

care

• pre-existing software and services including GP practice

websites 16

EMIS Health Community Pharmacy

Revenue up 9%, adjusted operating profit up 10%

Profitability and market share maintained:

• Clear market leader in independent market:
• 36% share of overall market
• Lloyds Pharmacy contract win:
• moves business into “supermarkets”
• increases overall market share close to 50%
• ver next 18 months
• Next generation dispensary management

product, ProScript Connect:

• for independents and supermarkets
• enables “Hub and Spoke”
• now piloting
• Integrated products - available across

whole estate – connect pharmacies, GPs and patients:

• Medicines Manager
• GP Record Viewer
• My Local Pharmacy App
• EMIS Web for Community Pharmacy:
• assists pharmacies providing extended primary

care services

• completed internal testing, piloting for 2017

launch 17

EMIS Health Secondary & Specialist Care

Revenue up 42%, adjusted operating profit up 22%

EMIS Health Secondary Care:

• Revenue growth but mixed performance

despite acquisition contributions

• New management team appointed
• Focus on:
• perational improvements
• product set rationalisation
• exiting non-core geographies / targeted

redundancies

• convergence with EMIS Health Framework to

deliver improved and connected services for customers and enhanced prospects for the business

• Recent contract wins include:
• Hospital Pharmacy - North Midlands Trust
• Patient Administration System - preferred bidder
• E-prescribing and medicines administration - St

Andrew’s

• Endoscopy solution - Epsom & St Helier Hospital
• Document management solution – East Cheshire
• Strong pipeline
• Order communications (formerly Indigo 4)

continued to perform well

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EMIS Health Specialist and EMIS Care

Ophthalmology software and screening - a strong set of results

EMIS Health Specialist:

• market lead in retinopathy screening software

maintained (79% of programmes)

• pportunity with intended single solution

retinopathy software procurement for England

EMIS Care:

• utsourced screening services:
• Medical Imaging - performed well - now

rebranded EMIS Care

• contract wins worth £28m secure five year

retinopathy screening services in:

• South West London
• Newcastle & Gateshead
• Arden, Herefordshire & Worcestershire
• further outsourcing opportunities from 2016

tenders 19

EMIS Health Integrated Care

Considerable progress

• Gibraltar whole healthcare economy

Phase 1 live and phase 2 progressing. Integrates Group products in:

• accident and emergency, outpatient clinics and patient

administration system

• community services
• primary care
• community pharmacy
• rder communications
• Wolverhampton CCG:
• financially supporting activation of Pharmacy Access
• enables ProScript pharmacies to:
• request repeat prescriptions electronically from GPs

using EMIS Web

• view key clinical data in the GP record
• USP in CCMH, Community Pharmacy and Secondary

is integration with EMIS Web for primary care

• Commitment to internal integration and third party

interoperability

• Connected care delivering on promise of faster,

better, cheaper care.

20

EMIS Group Markets & Competitors

21

EMIS Group Organic Growth Opportunities

• Primary Care & Commissioning
• Northern Ireland
• Scotland
• Patient Access
• Patient
• CCMH
• NME/North 180
• targeting 15% overall market share
• Community Pharmacy
• implementation of “supermarket” estate
• enhanced integrated product offerings
• Secondary & Specialist
• hospital procurements post NHS National Programme for IT
• ophthalmology screening outsourcing
• Integrated care
• Federations
• interoperability/partner programme
• Unscheduled Care

22

Summary and outlook

• Good underlying profit growth in line with the Board's expectations, derived from organic

and acquisitive mix

• Group continues to trade in line with the Board's expectations
• Outlook encouraging:
• Strong revenue visibility with 79% recurring revenue
• Good order book and pipelines in all segments
• Secondary Care improved financial performance expected in 2016
• Growth opportunities across all markets

“This Government will increase spending in real terms every year in this

• Parliament. The NHS will receive £10 billion more per year in real terms by

2020-2021 than in 2014-15. This investment backs in full the Five Year Forward View and will mean patients receive a truly seven-day health service, with the services people need being offered in hospitals at the weekend and people able to access a GP at evenings and weekends … NHS England should support the NHS to make better use of digital services and technology to transform patients’ access to and use of health and care, including online access to their personal health records.”

2016 Mandate to NHS England 23

Questions?

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Appendix

25

5 year financial record

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1 Excludes impairment charges, release of contingent acquisition consideration, capitalisation and amortisation of development costs and amortisation of acquired

• intangibles. Earnings per share calculations also adjust for the related tax and non-controlling interest impact.

2 Stated after deduction of capitalised development costs.

EMIS Health GP market share by country

(EMIS and competitor data estimated based on company records showing customers installed as at 31 December 2015)

Country EMIS Health

%

InPS

%

TPP

%

Other

%

Total England 4,303

55.9

684

8.9

2,613

33.9

102

1.3

7,702 Scotland 509

51.6

477

48.4

• 986

Wales 201

44.9

247

55.1

• 448

Northern Ireland 197

56.3

125

35.7

• 28

8.0

350 UK Total 5,210

54.9

1,533

16.2

2,613

27.5

130

1.4

9,486 27

The Leeds PHR Project

A smartphone pilot study has highlighted a potential solution for White Coat Syndrome - the medical phenomenon that increases some patients' blood pressure in the GP surgery. Patient Angela Howard was able to prove that her surgery blood pressure test results were uncharacteristically high and not an accurate reflection of her actual health in a month-long trial of the Personal Health Record (PHR) within EMIS Health's Patient Access app. Angela collected blood pressure readings at home and shared them electronically with Dr Walling, her GP. The results of blood pressure tests taken at home were normal, proving that she did not need further treatment. Angela said: "Taking part in this trial has been brilliant because it has proven that I don't really have high blood pressure and can now get on with doing the things I want to do in order to improve my health, such as going to the gym. I'd recommend using the Patient Access Personal Health Record to anyone. It's so easy to use and it has provided me with real peace of mind." Dr Walling said the PHR could enable GPs to make better-informed decisions when treating patients with a range of problems, including asthma, diabetes and weight issues.

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What does connected care do?

wLong term Condition

Management

vDischarge

Summaries

uUnscheduled Care

& Referrals

x y 29

NHS England - New Models of Care - 1

30

NHS England - New Models of Care - 2

31

NHS England - New Models of Care - 3

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