1
Virtus He a lth (ASX:VRT )
F I NANCI AL RE SUL T S PRE SE NT AT I ON H1F Y20
T ue sd a y 18 F e b rua ry 2020, 9.00a m AE DT
F I NANCI AL RE SUL T S PRE SE NT AT I ON H1F Y20 T - - PowerPoint PPT Presentation
Virtus He a lth (ASX:VRT ) F I NANCI AL RE SUL T S PRE SE NT AT I ON H1F Y20 T ue sd a y 18 F e b rua ry 2020, 9.00a m AE DT 1 DI SCL AI ME R T he ma te ria l in this pre se nta tio n ha s b e e n pre pa re d b y Virtus
1
T ue sd a y 18 F e b rua ry 2020, 9.00a m AE DT
2
T he ma te ria l in this pre se nta tio n ha s b e e n pre pa re d b y Virtus He a lth L imite d ABN 80 129 643 492 (“Virtus He a lth”) a nd is g e ne ra l b a c kg ro und info rma tio n a b o ut Virtus He a lth’ s a c tivitie s c urre nt a t the da te o f this pre se nta tio n. T he info rma tio n is g ive n in summa ry fo rm a nd inc lude s fina nc ia l a nd o the r info rma tio n a nd do e s no t purpo rt to b e c o mple te . Info rma tio n in this pre se nta tio n, inc luding fo re c a st fina nc ia l info rma tio n sho uld no t b e c o nside re d a s a dvic e o r a re c o mme nda tio n to inve sto rs o r po te ntia l inve sto rs a nd do e s no t ta ke into a c c o unt inve stme nt o b je c tive s, fina nc ia l situa tio n o r ne e ds o f a ny pa rtic ula r inve sto r. T he se sho uld b e c o nside re d, with o r witho ut pro fe ssio na l a dvic e whe n de c iding if a n inve stme nt is a ppro pria te . Pe rso ns ne e ding a dvic e sho uld c o nsult the ir sto c kb ro ke r, so lic ito r, a c c o unta nt o r o the r inde pe nde nt fina nc ia l a dviso r. T he re le a se , pub lic a tio n o r distrib utio n o f this pre se nta tio n in c e rta in jurisdic tio ns ma y b e re stric te d b y la w a nd the re fo re pe rso ns in suc h jurisdic tio ns into whic h this pre se nta tio n is re le a se d, pub lishe d o r distrib ute d sho uld info rm the mse lve s a b o ut a nd o b se rve suc h re stric tio ns. T his pre se nta tio n do e s no t c o nstitute , o r fo rm pa rt o f, a n o ffe r to se ll o r the so lic ita tio n o f a n o ffe r to sub sc rib e fo r o r b uy a ny se c uritie s, no r the so lic ita tio n o f a ny vo te o r a ppro va l in a ny jurisdic tio n, no r sha ll the re b e a ny sa le , issue o r tra nsfe r o f the se c uritie s re fe rre d to in this pre se nta tio n in a ny jurisdic tio n in c o ntra ve ntio n o f a pplic a b le la w. Ce rta in sta te me nts ma de in this pre se nta tio n a re fo rwa rd-lo o king sta te me nts. T he se fo rwa rd- lo o king sta te me nts a re no t histo ric a l fa c ts b ut ra the r a re b a se d o n Virtus He a lth L imite d’ s c urre nt e xpe c ta tio ns, e stima te s a nd pro je c tio ns a b o ut the industry in whic h Virtus He a lth o pe ra te s, a nd b e lie fs a nd a ssumptio ns. Wo rds suc h a s “a ntic ipa te s”, “e xpe c ts”, “inte nds,”, “pla ns”, “b e lie ve s”, “se e ks”, “e stima te s”, a nd simila r e xpre ssio ns a re inte nde d to ide ntify fo rwa rd-lo o king sta te me nts. T he se sta te me nts a re no t g ua ra nte e s o f future pe rfo rma nc e a nd a re sub je c t to kno wn a nd unkno wn risks, unc e rta intie s a nd o the r fa c to rs, so me o f whic h a re b e yo nd the c o ntro l o f Virtus He a lth, a re diffic ult to pre dic t a nd c o uld c a use a c tua l re sults to diffe r ma te ria lly fro m tho se e xpre sse d o r fo re c a ste d in the fo rwa rd-lo o king sta te me nts. Virtus He a lth c a utio ns inve sto rs a nd po te ntia l inve sto rs no t to pla c e undue re lia nc e o n the se fo rwa rd-lo o king sta te me nts, whic h re fle c t the vie w o f Virtus He a lth o nly a s o f the da te o f this pre se nta tio n. T he fo rwa rd-lo o king sta te me nts ma de in this pre se nta tio n re la te o nly to e ve nts a s o f the da te o n whic h the sta te me nts a re ma de . Virtus He a lth will no t unde rta ke a ny o b lig a tio n to re le a se pub lic ly a ny re visio ns o r upda te s to the se fo rwa rd-lo o king sta te me nts to re fle c t e ve nts, c irc umsta nc e s o r una ntic ipa te d e ve nts o c c urring a fte r the da te o f this pre se nta tio n e xc e pt a s re q uire d b y la w o r b y a ny a ppro pria te re g ula to ry a utho rity. A numb e r o f fig ure s, a mo unts, pe rc e nta g e s, e stima te s, c a lc ula tio ns o f va lue a nd fra c tio ns in this pre se nta tio n a re sub je c t to the e ffe c t o f ro unding . Ac c o rding ly, the a c tua l c a lc ula tio n o f the se fig ure s ma y diffe r fro m the fig ure s se t o ut in this pre se nta tio n. In a dditio n, a numb e r o f fig ure s ha ve b e e n c a lc ula te d o n the b a sis o f a ssume d e xc ha ng e ra te s, a s se t o ut in this pre se nta tio n. T
c o ntra c to rs, a dvise rs no r a ny o the r pe rso n, a c c e pts, a nd e a c h e xpre ssly disc la ims, a ny lia b ility, inc luding witho ut limita tio n a ny lia b ility a rising fro m fa ult o r ne g lig e nc e , fo r a ny e rro rs o r missta te me nts in, o r o missio ns fro m, this pre se nta tio n o r a ny dire c t, indire c t o r c o nse q ue ntia l lo ss a rising fro m the use o f this pre se nta tio n o r its c o nte nts o r o the rwise a rising in c o nne c tio n with it.
3
4
4
E BIT DA Mar gin (e xc l.
AASB 16 ‘L e ase s’ impac t)1
e a se s’ e ffe c tive 1 July 2019, re sulting in a n inc re a se to E BIT DA o f $7.4m a nd de c re a se to NPAT
31 De c e mb e r 2019. T he c o mpa ra tive pe rio d ha s no t b e e n re sta te d, re fe r to no te 1 o f ha lf ye a r re po rt a nd slide 19 fo r furthe r de ta ils
Re ve nue 1.0%
E BIT DA $39.5m 1 NPAT attr ibutable to
dinar y e quity holde r s
E PS 2.4%
Inte r im Divide nd
fully fr anke d
Unde r lying E BIT DA stable at $32.1m (e xc l. AASB 16 L e ase s impac t)
5
5
Vir tus maintains Austr alian mar ke t le ade r ship position
VF c linic E BI T DA inc re a se d b y 4.5% (e xc luding impa c t o f AASB 16 ‘ L e a se s’ )
VF da y ho spita l pro c e dure vo lume inc re a se d 5.7%
nte rna tio na l o pe ra tio ns ma inta ine d E BI T DA de spite so fte r vo lume s – E BI T DA impro ve me nt in I re la nd, Sing a po re a nd UK
6
7
7
Defend and build premium business
AS fro m so ft ma rke t c o nd itio ns
Grow low price volume
Grow Diagnostics revenue
Grow non IVF Day Hospital revenue
pro c e d ure s
c o mmissio ne d fa c ilitie s
8
8
Y20 o n pc p a lo ng e a ste rn se a b o a rd
Y20 inc re a se d 2.7% to 8,302 c yc le s (pc p 8,085)
C g re w 10.2% o n pc p, ma rke t g ro wth 1.7%
D g re w 6.2% o n pc p, ma rke t g ro wth 4.4%
) de c line d b y 3.4% o n pc p, ma rke t de c line 0.5%
AS de c line d b y 20.3% o n pc p, ma rke t de c line 5%
F Cs de live re d lo w pric e vo lume inc re a se o f 30.2%
mpro ve d pe rfo rma nc e a c ro ss a ll sta te s
Y19: 17.3%)
VF c linic E BI T DA o f $1.3m
E BIT DA inc r e ase s
9
9
BI T DA de c re a se d 30.2% o ve r pc p impa c te d b y:
utilisa tio n, de c lining to 12.9% o f fre sh c yc le s H1F Y20 (F Y19: 14.6%) due to c linic a l pra c tic e c ha ng e
nc re a se d c o mplia nc e c o sts
c urre ntly unde r sc ie ntific e va lua tio n
Diagnostic r e ve nue stable , E BIT DA impac te d
10
10
Day Hospital E BIT DA stable
BI T DA impro ve me nt fro m no n-I VF pro c e dure s o ffse t b y lo we r I VF pro c e dure s fro m so fte r pre mium se rvic e vo lume s in NSW
BI T DA impro ve d b y $0.3m o ve r pc p a s mo re no n-I VF surg e ry is se c ure d
nc re a se in no n-I VF pro c e dure re ve nue o f 6.8% o n pc p a c ro ss a ll Spe c ia list Da y Ho spita ls
11
12
12
E BIT DA up on pc p
Y20 (H1F Y19: 1,094)
lo we r fre sh c yc le vo lume s due to inc re a se in fro ze n c yc le s
BI T DA (lo c a l c urre nc y) up 17.1% o n pc p a s a re sult
13
13
Y20 (H1F Y19: 930)
BI T DA (lo c a l c urre nc y) do wn 45.9% o n pc p Da nish c linic s e xpe rie nc e d a c ha lle ng ing six mo nths impa c te d b y:
re g ula tio ns)
a ddre sse d
E BIT DA down on pc p
14
14
C pe rfo rme d 215 fre sh c yc le s (H1F Y19: 228)
a dd NHS o utpa tie nt a c tivitie s
BI T DA up 125% o ve r pc p
Comple te F e r tility r e ve nue and E BIT DA impr
15
15
Y20 (H1F Y19: 176)
BI T DA up 77.4% c o mpa re d to pc p (lo c a l c urre nc y)
Volume s and E BIT DA c ontinue to gr
16
17
17
No te s: 1- E xc lude s $7.4m o f le a se re pla c e d b y De pre c ia tio n a nd Inte re st c ha rg e s o n a do ptio n o f AASB 16 ‘ L e a se s’ in H1F Y20 2 - Inc lude s $5.9m o f de pre c ia tio n o n Rig ht-o f-use a sse ts a rising fro m a do ptio n o f AASB 16 ‘ L e a se s’ in H1F Y20 3 - Inc lude s $1.7m o f inte re st o n le a se lia b ilitie s a rising fro m a do ptio n o f AASB 16 ‘ L e a se s’ in H1F Y20 Sha de d a re a indic a te s IF RS disc lo sure s H1F Y20 F ina nc ia l Sta te me nts; re fe r ne xt pa g e fo r re c o nc ilia tio n o f de ta ile d a djustme nts fro m sta tuto ry pro fit to a djuste d pro fit.
Statutor y Re sults Adjustme nt Adjuste d Re sults $Millions H1F Y20 H1F Y19 H1F Y20 H1F Y19 H1F Y20 H1F Y19
Re ve nue 142.1 140.7 142.1 140.7
Se g me nt E BI T DA1 46.5 38.9 46.5 38.9
E BIT DA1 39.5 32.4
(0.8) (0.6)
38.8 31.8
De pre c ia tio n a nd a mo rtiza tio n 2 (12.6) (6.6) (12.6) (6.6) E BI T 26.9 25.8 (0.8) (0.6 ) 26.2 25.2 I nte re st 3 (5.5) (4.9) 0.2 0.7 (5.3) (4.2)
Profit be fore inc ome ta x 21.4 20.9
(0.5) 0.1
20.9 21.0
I nc o me ta x e xpe nse (5.9) (6.0) (5.9) (6.0)
Profit a fte r inc ome ta x 15.5 14.9
(0.5) 0.1
15.0 15.0
Pro fit a fte r inc o me ta x a ttrib uta b le to no n-c o ntro lling inte re st (0.5) (0.3)
(0.3)
Profit a fte r inc ome ta x a ttributa ble to ordina ry e quity holde rs 15.0 14.6
(0.5) 0.1
14.5 14.7
E a rning s pe r sha re (c e nts) 18.65 18.21 Dilute d e a rning s pe r sha re (c e nts) 18.48 18.10
18
18
Ne t move me nt from non- c a sh tra nsa c tion ite ms, tra nsa c tion e xpe nse s a nd CE O tra nsition c osts
No te s: 1- No n-c a sh inte re st re la te s to the unwinding o f the disc o unt o n the put lia b ilitie s a nd c o nting e nt c o nside ra tio n
$Millions H1F Y20 H1F Y19
Profit a fte r inc ome ta x a ttributa ble to ordina ry e quity holde rs 15.0 14.6
No n-c a sh I nte re st1 0.2 0.7 T ra nsa c tio n c o sts
F a ir va lue a djustme nt to tra nsa c tio n put lia b ilitie s (1.5) (0.8) CE O tra nsitio n a nd re c ruitme nt c o sts 0.8
14.5 14.7
19
19
Impa c t of Adoption of AASB 16 ‘L e a se s’
$Millions Sta tutor y R esults H1FY20 I m pa c t of AASB 16 'L ea ses"
Re ve nue 142.1
Se gme nt EBIT DA 46.5 ↑ Increase of $7.4m resulting from reclassification of lease expenses to Depreciation and Interest Expense below EBITDA
E BIT DA 39.5 ↑ Increase of $7.4m from above
De p re c i a ti
sa ti
(12.6) ↑ Increase of $5.9m resulting from recognition of depreciation of right-of-use assets
E BIT 26.9
Inte re st (5.5) ↑ Increase of $1.7m resulting from recognition of lease liabilities on operating leases
Pr
e inc ome tax 21.4 ↓ Decrease of $0.2m resulting from differences on the profile of leases
Inc o me ta x e xp e nse (5.9)
Pr
inc ome tax 15.5 ↓ Net decrease of $0.2m
Ea rni ngs p e r sha re (c e nts) 18.65 ↓ Net decrease of 0.25 cents Di lute d e a rni ngs p e r sha re (c e nts) 18.48 ↓ Net decrease of 0.25 cents
20
20
1HF Y20 Re ve nue g rowth drive n by:
F C pe rfo rma nc e
mpro ve me nt in QF G full se rvic e vo lume s
Pa rtia lly offse t by:
a sI VF
T ria ng le n)
1HF Y20 E BIT DA inc re a se drive n by:
mpa c t o f a do pting AASB 16 ‘ L e a se s’ - $7.4m inc re a se a rising fro m a re c la ssific a tio n o f le a se e xpe nse s to de pre c ia tio n a nd inte re st c ha rg e s
F C a nd QF G full se rvic e vo lume s
Pa rtia lly offse t by:
BI T DA re duc tio n
O tra nsitio n a nd re struc ture c o sts
T se c urity c o sts
132.3 131.4 133.8 140.7 142.1
H1F Y16 H1F Y17 H1F Y18 H1F Y19 H1F Y20
H1F Y16- 20 Re ve nue
36.2 32.8 34.8 32.4 32.1 7.4
H1F Y16 H1F Y17 H1F Y18 H1F Y19 H1F Y20
H1F Y16-20 Gr
BIT DA 39.5
21
21
Ope ra ting c a sh flo ws inc re a se a s a re sult o f:
pa yme nts to fina nc ing a c tivitie s a s a re sult
e a se s’
le ve ls
c o mpa re d to pc p F re e c a sh flo ws a fte r d ivid e nd s a lo ng with e xisting re se rve s wa s use d fo r:
$6.6m in No ve mb e r 19; a nd
Summar y H1F Y20 (A$m) H1F Y19 (A$m)
Group E BIT DA 39.5 32.4
Cha ng e s in o the r o pe ra ting a sse ts/ lia b ilitie s* (2.3) (5.9) Ne t fina nc ia l c o sts (3.3) (3.9) L e a se inte re st (1.7)
nc o me ta x (7.7) (7.9) Othe r (0.9) 0.4
Ope ra ting c a sh flow 23.6 15.1
L e a se princ ipa l pa yme nts (5.7)
X (2.8) (9.0)
F re e c a sh flow 15.1 6.1
Divide nds pa id (9.6) (9.6)
F re e c a sh flow a fte r divide nds 5.5 (3.5)
*Excludes non-cash items (fair value adjustments and share-based payments)
Ke y move me nts
22
22
Ke y move me nts AASB 16 ‘L e ase s’ adoption – Ke y Impac ts
L e a se lia b ilitie s
Cash balanc e
E xisting c a sh re se rve s use d to e xe rc ise fina l put o ptio n in SIMs Gro up o f $6.6m - re d uc e d o the r fina nc ia l lia b ilitie s
Ge ar ing
e ve ra g e ra tio o f 2.8 time s a d juste d g ro up E BIT DA (L T M)
ull c o mplia nc e with suffic ie nt he a d ro o m und e r b o th inte re st c o ve r a nd le ve ra g e ra tio s
und ing c a pa c ity a va ila b le o f $85m fro m unuse d d e b t fa c ilitie s
Divide nd pr
12 c ps (pc p 12 c ps), fully fra nke d , pa ya b le o n 16th April 2020
$millions Statutor y De c 19 Statutor y June 19
Ca sh 12.6 18.8 T ra de a nd o the r re c e iva b le s 9.4 14.8 I nve nto rie s 1.2 1.3 E q uity a c c o unte d inve stme nts 1.5 1.5 Othe r fina nc ia l a sse ts 4.7 3.2 PP&E 35.4 38.0 De fe rre d ta x a sse ts 9.7 7.1 Rig ht-o f-use a sse ts 85.5
nta ng ib le a sse ts 457.3 459.6
T
617.3 544.3
T ra de a nd o the r pa ya b le s 23.6 26.5 De fe rre d re ve nue 12.3 16.3 Bo rro wing s 170.9 173.7 De fe rre d ta x lia b ility 0.8 1.1 Pro visio ns 11.3 11.4 L e a se lia b ilitie s 97.9
0.0 1.1 Othe r fina nc ia l L ia b ilitie s 11.1 19.6
T
327.9 249.7 Ne t a sse ts 289.4 294.6
23
23
F Y20/ 21 F
VF da y ho spita l re ve nue in Austra lia
nte rna tio na l re ve nue in e xisting lo c a tio ns
O, Ms K a te Munning s c o mme nc e s 4 Ma y 2020
24
25
25
Vir tus Note H1F Y20 H1F Y19 Change
Numb e r o f I VF c yc le s in Virtus Austra lia 1 8,302 8,085 2.7% T F C c yc le s a s a pe rc e nta g e o f to ta l Virtus I VF c yc le s 22.0% 17.3% 4.7% Numb e r o f I VF c yc le s in NSW, QL D, T AS, VI C, ACT ma rke t 20,773 20,529 1.2% E a ste rn sta te s ma rke t sha re 1 39.9% 39.4% 0.5% Na tio na l ma rke t sha re 1 33.6% 33.5% 1.0% T re a tme nt vo lume 2 15,582 15,368 1.4% Ave ra g e numb e r o f F e rtility Spe c ia lists 102 107 (4.7%) Ave ra g e numb e r o f c yc le s pe r F e rtility Spe c ia list 81 76 6.6% Ave ra g e a g e o f F e rtility Spe c ia lists 53 52 (1.6%) Ave ra g e to ta l re ve nue pe r c yc le (A$) 13,477 13,797 (2.3%) L a b o ur a s a % o f to ta l re ve nue 35.3% 33.9% (1.4%) Pro vide r fe e s a s a % o f to ta l re ve nue 14.6% 14.9% 0.3% Re po rte d se g me nt E BI T DA ma rg in % 3 29.9% 29.8% 0.0%
No te s: 1. Implie d la st six mo nths ma rke t sha re is b a se d o n fre sh a nd c a nc e lle d c yc le s in NSW,VIC, QL D, T AS a nd ACT 2. T
s a nd F E T s 3. E xc lude s $7.4m inc re a se in E BIT DA re sulting fro m the a do ptio n o f AASB 16 ‘ L e a se s’
26
26
Vir tus Inte r national : 21% of Gr
e ve nue s
27
27
55% 35% 10%
T r e atme nt Mix
F re sh c yc le F ro ze n c yc le AI / OI tre a tme nt*
Vir tus Cyc le s *AI/OI Artificial insemination/ ovulation induction treatment
28
28
Austra lia
e de ra l He a lth a g e nda fo r disc ussio n. Ce ntre Allia nc e se na to r Stirling Griff ta b le d a le g isla tive pro po sa l re q uiring g re a te r sc rutiny o f the I VF industry thro ug h re po rting o f pa tie nt o utc o me s (July 2019)
VF se rvic e s e g NSW Go vt a nno unc e d Pre -I VF F e rtility te st $500 re b a te a nd suppo rt o f pub lic ho spita l I VF in Ja nua ry 2020; VI C Go vt via VART A c o mmissio ne d Mic ha e l Go rto n ART Re vie w.
e de ra l He a lth De pa rtme nt re vie w o f Me dic a re Be ne fits Sc he dule – re po rt pub lishe d fo r pub lic c o nsulta tio n with no c ha ng e s to ARS pro po se d to da te
b usine sse s in re la tio n to pa tho lo g ist supe rviso ry re q uire me nts.
Ire la nd
VF a re still to pla y o ut a nd the re is no time fra me a rtic ula te d o n the se ma tte rs; a nd
e rtility Re g ula to r e xpe c te d to b e intro duc e d in 2020.
UK
VF ta riff - A “Guide line s fo r Co mmissio ning F e rtility Se rvic e s” pa pe r ha s b e e n re le a se d b y the HF E A to c linic a l c o mmissio ning g ro ups. T his inc lude s a pro po se d ta riff fo r I VF
b e c o nte ste d b y c linic s.
Sing a pore
De nma rk
29
29
ASSIST E D RE PRODUCT IVE SE RVICE S SPE CIAL ISE D DIAGNOST ICS DAY HOSPIT AL S
Austra lia 36 Ire la nd 3 Sing a po re 1 De nma rk 2 UK 1
F E RT IL IT Y CL INICS
E mb ryo lo g y 27 Andro lo g y 29 Ge ne ra l Pa tho lo g y 5 Ge ne tic s 2 L ABORAT ORIE S
F E RT IL IT Y SPE CIAL IST S
NUR SE S, COUNSE L L OR S, PAT IE NT SUPPOR T (inc l DIAGNOST ICS)
SCIE NT IST S
IVF a nd no n-IVF pro c e d ure s
DAY HOSPIT AL S
IVF a nd no n-IVF pro c e d ure s
DAY HOSPIT AL S
30