FY 2019 Results Year ended 30 June 2019 16 August 2019 Our Group - - PowerPoint PPT Presentation

FY 2019 Results

Year ended 30 June 2019

16 August 2019

Our Group

A comprehensive strategy

Repositioning the Medical Centres via the Leapfrog program

 People: Attracting the right GPs through a multi-channel approach and strengthening nursing and front-line support staff  Process: Delivering operational efficiencies, digitisation, and new and expanded service offerings  Property: Improving centre utilisation and consumer experience where local demand is evident

3 FY 2019 Results

Investing in emerging businesses - Dental, IVF, Day Hospitals

 Operating in sectors with disruption and growth potential  Diversifying revenue streams  Developing patient flow opportunities within a community setting

Organisational redesign

 Simplifying management structure, improving divisional agility, driving a more efficient group function

Leading-edge technology

 Laboratory Information System (LIS) program will revolutionise processes, reporting and service delivery  Medical Director 3 (MD3) practice management system delivering uniformity throughout network and greater digital adaptability  Imaging Core Application Refresh (iCAR) delivering efficiencies

and enhancing referrer / patient interaction

Key achievements with a strong run-rate into FY2020

Group

 Increasingly positive momentum throughout the year  Rolled out ‘Healius’ brand – supporting record GP recruitment  Organisational redesign commenced 2H

4 FY 2019 Results

Medical Centres

 2 consecutive halves of improved returns, record number of GP recruits, gross billings per hour up  Over 95% of centres on the same PMS with appointments  15 sites upgraded as planned  Expanded consumer offerings with SwiftQ Immediate Care, Skin2, Logic Health Emerging businesses  Montserrat to deliver a diversified growth platform  IVF rebranded Adora. Fastest growing provider of IVF services  SwiftQ Dental launch to address market need

Imaging

 3 successive years of double-digit EBIT growth  Market share increasing  iCAR roll-out continues apace with over 70 live sites  Successful contract wins and delivery:

• Northern Beaches Hospital
• Australian Defence Force Health Services

Pathology

 Improved 2H returns (up 46% on 1H)  FY19 productivity program targets achieved  Progress on laboratory platforms

Group Results

Group results

• Group NPAT up 6.5% on revenue growth of 5.9%
• EBIT up 4.5% with double-digit growth in Imaging and Medical Centres:
• All three divisions seeing increasingly positive momentum
• Pathology up 46% 2H v 1H
• Medical Centres delivered two halves of improved returns
• Imaging delivered 3 years of double-digit growth
• EBIT includes $12.5 million of investment in greenfield sites3. M&A roll-ins accelerating ramp-up in Medical Centres. Strong improvement once

fully contributing

• Reported results improved with legacy issues addressed. Reported EBIT reflects $49.9m of investment, including in strategic initiatives2
• Given current capital investment phase, dividend temporarily reduced. Final dividend at 3.4 cps. Total dividend 7.2 cps, both fully franked
• Accounting standard changes:
• FY19 $39.5m reduction in revenue/EBITDA but nil EBIT impact (AASB 15 adoption)4
• FY20 material improvement in EBITDA and EBIT (AASB 16 adoption)5

6 FY 2019 Results

1All comments relate to underlying results unless noted 2Reconciliation – slide 30 3Reconciliation – slide 31 4AASB 15 adjustment – slide 32 5AASB 16 adjustment – slide 33

Group $m FY 2019 FY 2018 FY 2019 FY 2018 Revenue 1,804.5 1,704.6 1,810.3 1,704.6 EBIT 167.3 160.1 117.4 64.6 NPAT 93.2 87.5 55.9 4.1 Underlying

1

Reported

2

Strategic projects

• Four key projects which are transformational in nature and unlikely to be undertaken again at such a collective magnitude
• Opex costs are adjusted between reported and underlying results
• Future adjustments:
• iCAR expected to cease after FY20
• Leapfrog opex expected to substantially reduce after FY20
• Corporate renewal to change following current organisational redesign
• LIS in pathology is a 5-year project

7 FY 2019 Results

FY 2019 $m Laboratory Platforms Leapfrog

1

iCAR Corporate Project management, design & planning 9.3 3.6 2.2 3.0 Project implementation & training

2

1.0 9.5 0.9 6.2 Total Opex (adjusted between reported and underlying)

3

10.3 13.1 3.1 9.2 Property, plant & equipment 1.1 18.5 0.0 0.0 Intangibles 3.1 13.1 5.0 0.0 Total Capex 4.2 31.6 5.0 0.0 Total Project Costs 14.5 44.7 8.1 9.2

1 Included in opex for Leapfrog are project management costs, additional recruitment and M&A costs to support the Leapfrog ramp-up, and additional costs to support implementation and training 2 All implementation costs are capitalised where they directly relate to PPE or an intangible asset otherwise implementation costs are expensed as non-underlying items 3 Refer slide 30 for reconciliation between reported and underlying

Free cash flow

• OCF of $128m (FY 2018 $202m):
• $22m back pay for the Medical Centres modern awards adjustment and Dorevitch pay determination. Both fully provided in FY18
• $16m increase in tax payments overall including $10m tax refund in FY 2018
• Maintenance capex $52m delivering $76m FCF
• Growth capex $176m - partly funded by the capital raise – includes:
• $68m Montserrat Day Hospitals acquisition
• $36m strategic projects1

8 FY 2019 Results 128 76 195 (30) (38) (52) 50 100 150 200 Gross OCF Interest Tax OCF Maintenance capex Free cash flow $m

92

1 Refer slide 7. Excludes $4.7m non-cash accrual

Net debt and dividend

• Significant improvement in leverage since FY 2015 from capital recycling program, free cash flow

generation and capital raise in 1H 2019

• Spend is high with investment in Montserrat and strategic initiatives. Spend is gated and monitored.

Will deliver future operating cash flow

• Continual balance of competing demands: optimal gearing, investment in strategic initiatives and

dividends

• Board decision to temporarily reduce dividend payout ratio given on-going investment phase

9 FY 2019 Results

1 Bank gearing ratio is calculated based on underlying EBITDA before the impact of AASB 15

1,156 816 784 777 678

Net debt reduction

FY15 FY16 FY17 FY18 FY19

Reported As at $m 30 June 2019 30 June 2018 Bank and finance debt 797.9 860.8 Cash (119.7) (84.0) Net debt 678.2 776.8 Bank gearing ratio (covenant <3.5x)1 2.4x 2.7x Bank interest ratio (covenant >3.0x) 9.5x 9.0x Gearing (net debt: net debt + equity) 24.8% 29.9%

Divisional Results and Strategies

Pathology - results

• Revenue:
• Annual revenue growth above market when normalised for loss of bowel screening contract
• Improved volume growth towards end of 2H with June & July returning to long term averages
• Good fee growth
• Increases in specialties including histo and genetics - latter revenue up 13%
• EBIT:
• Strong performance in 2H with margin expansion. Productivity programs delivered projected savings
• Annual EBIT grew above revenue when normalised for loss of bowel screening contract and Dorevitch labour cost increases
• Consumables savings despite growth in high-value tests (NIPT and HPV test1)
• Investment in laboratory platforms

11 FY 2019 Results

Underlying FY 2019 $m FY 2018 $m Better/ (worse) % Revenue 1,128.3 1,090.6 3.5 EBITDA 136.2 138.7 (1.8) Depreciation (19.8) (19.0) (4.2) Amortisation (5.3) (5.6) 5.4 EBIT 111.1 114.1 (2.6) Total capital expenditure 35.1 21.1 (66.4)

1 NIPT= Non-invasive prenatal test, HPV= human papillomavirus

Cost control

• Consolidation of esoteric testing and optimisation of regional lab network
• Focus on returns metrics within collection centre footprint
• Current organisational re-design initiatives identifying further efficiencies

Investment

• Upgraded Serum Work Area (main lab testing equipment) with Laverty to go-live in

September

• Implementation of new Laboratory Information System (LIS) to deliver improved

accuracy and efficiencies:

• selection of provider, SCC
• standardisation of processes and conventions across current systems
• detailed discovery phase
• Expansion of niche specialties including Genomic Diagnostics:
• NIPT continues its strong growth (revenue up 29% and EBIT 33%)
• New markets: BRCA cancer screening in 1st full year and pharmacogenomics introduced

mid-May

Pathology - strategy

New Serum Work Area at Laverty 12 FY 2019 Results

LIS

 Referrer/clinical benefits with improved accuracy and advanced testing  Operational benefits of standardised testing and faster turn-around  Financial benefits from FTE efficiency and automation

Medical Centres - results

13 FY 2019 Results

1 Revenue and EBITDA shown after $35.4m impact of AASB 15. Nil impact on

EBIT (refer slide 32)

2 Excludes $68.3m Montserrat acquisition and $3.8m new Montserrat clinics

Underlying FY 2019 $m FY 2018 $m Better/ (worse) % Revenue

1

327.4 289.7 13.0 EBITDA

1

61.4 53.7 14.3 Depreciation (20.4) (18.0) (13.3) Amortisation (3.4) (4.1) 17.1 EBIT 37.6 31.6 19.0 HCP capital expenditure 28.9 26.8 (7.8) Total capital expenditure

2

96.6 67.4 (43.3) Two halves of EBIT growth from 2H 2018 lows

• Turnaround in Healius Medical Centres with record GP recruits and GBPH up
• Health & Co moving from start-up loss to profit
• Investment in IVF and Day Hospitals delivering revenue with EBIT growth to come

EBIT $48m without greenfield centre ramp-ups

• Large greenfield investment causing drag on short-term returns
• M&A roll-ins to accelerate ramp-up: 3 Greensborough, 1 Corrimal & Robina
• Positive swing to occur as start-ups become profitable

Underlying EBIT 2H 2019 1H 2019 2H 2018 Medical Centres 19.7 17.9 12.1 Medical Centres before greenfield costs 23.6 24.7 20.2

Medical Centres – GP results

14 FY 2019 Results

1 Refer slide 35 & 36 for GP statistics 2 FTEs based on 40-hour week, 47-week year

95 sites nation-wide

73 Healius Medical Centres

61 with Dental sites 4 with IVF clinics

13 Health & Co 14 Day Hospitals (9 stand-alone)

1,296 GP partners

=1,090 FTEs2

164 Dentists

=133 FTEs2

11 IVF specialists

• pipeline of new specialists joining

Range of specialists

• operating out of our medical centres

and day hospitals

Healius Medical Centres GPs1

• Record GP cohort of 1,164 (992 FTEs2)
• Recruitment: 259 GPs (211 BaU, 39 M&A, 9 Registrars). 63% up on pcp
• Departures: Stabilised Q2, delivering monthly net increases from November.

Normalised retention ~90%

• Nearing end of contract transitions with ~10% of GPs on the old 5-year contracts
• Average age of recruits was 47, reducing GP cohort to ~54
• HCP upfront capex @ 50% of old levels, depending on GP preferences
• Leapfrog investment in property and M&A roll-ins

Health & Co

• Profit of $1.9m on $19.7m revenue
• Recruitment: 67 GPs (52 M&A, 15 recruits)
• Cohort of 132 GPs, (98 FTEs)
• Retention ~93%
• Investment in M&A

People

• Strong FY2020 pipeline including BaU and M&A roll-ins. ~70 FTEs with contracts

signed or terms approved

• Property transformations to further assist
• Introducing greater autonomy/skills at centres under new operating model

Process

• Rolling-out single PMS and appointments to all sites, to finish Sept 19
• Expanded consumer offerings inc. SwiftQ Immediate Care, Skin2 cancer clinics and

Logic Health occupational medicine

• GBPH increased with June at $239 p/h
• Introducing eRecalls, Self Service Check-in Kiosks & Join the Queue Remotely App

Property

• 15 centres transformed and extended. Further 6 dental and 6 skin-enabled rooms

uplifted in separate centres

• Overall produced: 49 consulting rooms, 12 dental surgeries, 5 immediate care, 15

minor surgery and procedure rooms, 11 ACCs and 17 staff rooms

Medical Centres - progress on Leapfrog strategy

15 FY 2019 Results

+103

Dental

• Dental in 61 Medical Centres with 164 Dentists, 133 FTEs
• Revenue up 4.8% to $35.2m. EBIT at $5.7m
• Centres with new dental facilities under Leapfrog delivering strong revenue growth
• Trialling innovative fixed-price general dentistry offering under SwiftQ Dental

Adora Fertility

• Rebranded to reflect new positioning
• In response to growing demand:
• Perth centre opening
• transition to larger facilities in Melbourne and Sydney
• introduction of satellite clinics in QLD and WA
• Fastest growing IVF provider in Aus with cycles up >30%
• Revenue up 29.9% to $16.5m. $0.5m EBIT loss due to greenfield investment
• Importantly $2.3m EBIT on whole-of-business BAU basis

Other (net of GP, Dental, IVF and Day Hospitals)

• $15.9m medical services revenue (specialists, allied health)
• $68.9m non-medical revenue

Emerging businesses - Dental and IVF

16 FY 2019 Results

Adora Fertility Clinic, Surry Hills SwiftQ Dental, Fairfield

Emerging businesses - Day Hospitals

17 FY 2019 Results

Montserrat: acquired October 2018

• Building diversified platform for future growth
• 3 centres opened including flagship Westside Private in Brisbane which

represents future of day hospitals in Australia (equivalent to ASCs1 in US)

• $19.5m revenue and a $0.6m EBIT contribution, with new centre openings
• Expected strong growth from FY2020

Healius Day Hospitals

• $13.4m revenue with IVF volumes supporting. $2.1m EBIT loss due to

greenfield investment, established sites profitable

• Rebranding as Montserrat, merging core quality and billing systems, focus
• n business development to support future growth
• FY20 growth in greenfield sites with joining of key ophthalmology groups

1 ASCs = Ambulatory Surgical Centers in US performing

same-day outpatient surgical care Day hospital business well positioned for future growth and further investment – Shift to day procedures in US where ASCs1 grown to > 5,000 – Cancer, cardio and ortho projected to grow strongly – In Australia, similar cost drivers and technology innovation – Highly fragmented sector with consolidation opportunities High quality business run by a strong and experienced management team – Modern facilities, strategically located and accessible – Retention of key management personnel



Complementary business for Healius – Platform for growth – Opportunities to integrate with Healius' IVF business – Opportunities to deliver pathology volumes – Existing relationships with a number of HCPs in Healius – Targeting $4-5m turnaround in Healius Day Hospitals

 

Diversifies Healius' sources of funding – Growth in non-Medicare revenues



Westside Private Hospital Greensborough Day Hospital

Imaging - results

• Revenue up 7.9% supported by same site growth, opening of new sites, and continued strength in MRI. Increased market share
• Market conditions not yet normalising to long-term averages
• NBH tracking well. New fully-licenced MRI.
• EBIT up 14.5% in 3rd successive year of double-digit increases:
• 2H 2019 productivity programs delivered targeted improvements
• EBITDA reduced by new and replacement equipment operating leases and AASB 15. Normalised EBITDA up ~12%
• Strong cash flow. Capex includes Imaging sites and iCAR

18 FY 2019 Results

1 Revenue and EBITDA shown after $4.1m impact of AASB 15. Nil impact on EBIT (refer slide 32)

Underlying FY 2019 $m FY 2018 $m Better/ (worse) % Revenue

1

391.3 362.6 7.9 EBITDA

1

54.1 51.2 5.7 Depreciation (13.4) (14.0) 4.3 Amortisation (2.0) (3.4) 41.2 EBIT 38.7 33.8 14.5 HCP capital expenditure 0.9 2.8 67.9 Total capital expenditure 22.3 36.9 39.6

Growth

• Growing market share with new and expanded sites, contract wins, M&A
• Contract wins:
• NBH (commenced October 2018)
• ADF Health Services in partnership with BUPA (commenced July 2019)
• Focus on high-end modalities. 3 new MRI licences

Imaging - strategy

19 FY 2019 Results

Investment

• Investment in high-end sites including Highfields, Port Macquarie & St Vincent’s

Private Hospital, Brisbane. Both with fully-licenced MRI and PET/CT

• iCAR investment:
• technology replacement and innovation across radiologist workflow, voice recognition,

referrer delivery channel and enhanced imaging

• Currently rolled out to over 70 sites and ~60% of radiologists trained
• Identified annualised net benefits ~$9m

Cost control

• Focus on optimising labour and operating cost model
• Current organisational re-design identifying further efficiencies

Corporate

• $(20.1)m (FY18 $(19.4)m) with increased IT costs and insurance premiums
• Organisational re-design to drive a more efficient group function

FY 2020

• Underlying NPAT for FY 2020 expected to be higher than FY 2019
• Long-term market growth is supported by:
• trends in population growth and ageing
• advancements in health technology and cancer survival rates
• rising patient expectations

Corporate and wrap‐up

20 FY 2019 Results 1 Subject to market conditions and before any adjustment for the impact of AASB 16

Highfields Imaging, Port Macquarie

Appendices About Healius

Australia-wide coverage 2,558 Total sites

2,318 Pathology

2,216 ACCs 102 Laboratories

95 Medical Centres & Day Hospitals 145 Imaging

29 Hospitals 61 Community Centres 55 Medical Centres

A market leading network

22 FY 2019 Results

73 Healius Medical Centres

61 with Dental sites 4 with IVF clinics

13 Health & Co 15 Day Hospitals

9 stand-alone

v

as at July 2019

18 Total Sites 61 Total Sites 213 Total Sites

25

25 Total Sites 678 Total Sites

625 19 34

685 Total Sites

630 19 36

840 Total Sites ACT 38 Total Sites

33 2 3 18 197 12 4 49 7 5 741 36 63

• Our largest division
• National pathology provider
• Market leader: QLD, VIC & WA
• $1bn+ in revenue p/a

Pathology

• No. 1 or 2 in each state

23 FY 2019 Results

• Approximate employees:
• 280 specialist pathologists
• 2,300 lab team of scientists and

assistants

• 3,800 collectors
• 800 couriers
• 900 support staff

Medical Centres

Unrivalled footprint of large scale medical centres and patient flow opportunities

Healius Medical Centres

• Multidisciplinary teams of GPs, allied health practitioners and specialists
• Open 365 days/year, often 7am to 10pm
• Affordable with most services bulk-billed
• $300m+ in revenue p/a
• ~8 million patient consults p/a

Health & Co

• Network of 13 established clinics across NSW, VIC, QLD & SA
• Smaller, mixed billing centres

Emerging businesses

• Day Hospitals - 14 day hospitals (9 stand-alone)
• Dental – 4th largest network, 61 centres operating within our Medical Centres
• IVF –Australia’s first bulk-billed IVF with 4 clinics and satellites across Australia

Overall >1,800 independent HCPs, 650 nurses and >1,600 support staff

24 FY 2019 Results

Maroubra Medical Centre

Diagnostic Imaging

• No. 3 national imaging provider
• Network of 145 imaging sites:
• 29 hospitals
• 61 community centres
• 55 medical centres
• $390m+ in revenue p.a.
• 3 million examinations annually
• Full suite of modalities including X-ray, MRI, PET, CT and ultrasound
• 112 Radiologists
• Approximate employees:
• 790 radiographers, sonographers, nuclear medicine specialists
• 40 nurses
• 570 support staff

25 FY 2019 Results

Comprehensive strategy

PEOPLE

Workplace of choice

PROCESS

Organisational efficiency

PROPERTY

Yield optimisation

Group

 Purpose, Mission and Values  Performance management framework  Learning and development programs  Modernisation of corporate support services infrastructure

 Outsourced facilities management / leasing  Property cost optimisation program

Pathology

 Staff engagement  LIS1/SWA2 delivering improved pathologist / referrer experience and enhanced brand

 LIS1 delivering efficiencies and improved

consumer experience

 Optimisation of pre-analytical processes  Technology upgrade to SWA2  Specialty service expansion  ACC5 and regional laboratory network optimisation  ACC expansions in Medical Centres  Core laboratory uplifts and centralisation of high-

end tests

Medical Centres

 Quality reset = right culture  Attracting the right HCPs4 with simplified

contracts, career pathways, skills development, appointment model

 New streams via registrars, roll-in M&As  Strengthening nursing and front-line

support staff

 Appointments enabling better continuity of care  Expansion of service offerings including SwiftQ

Immediate Care, ‘Skin2’ cancer clinics, and Logic Health occupational medicine

 Better consumer experience: e-recalls, self

check-in kiosks, join the queue remotely app  Modernisation and extension of a range of Healius Medical Centres, with extra GP rooms, dental surgeries, immediate care facilities, treatment rooms and staff rooms

Diagnostic Imaging

 Staff engagement  iCAR3 delivering improved radiologist

experience and enhanced brand

 Labour and operating model optimisation in

dispersed community network

 iCAR3 delivering efficiencies and improved

consumer experience

 Development of high-end sites  Optimisation of hospital channel

3 Imaging Core Application Refresh 4 Healthcare Professionals 1 Laboratory Information System 2 Serum Work Area 5 Approved Collection Centres

26 FY 2019 Results

Industry trends

Lower 5-year growth rates from subdued FY19 volumes

27 FY 2019 Results

Appendices Reconciliations

Divisional reconciliation

Underlying EBIT

29 FY 2019 Results

FY 2019 $m Pathology Medical Centres

1

Imaging Corporate Group

2

Revenue 1,128.3 327.4 391.3 0.3 1,804.5 EBITDA 136.2 61.4 54.1 (15.7) 236.0 Depreciation (19.8) (20.4) (13.4) (3.1) (56.7) Amortisation (5.3) (3.4) (2.0) (1.3) (12.0) EBIT 111.1 37.6 38.7 (20.1) 167.3 FY 2018 $m Pathology Medical Centres

1

Imaging Corporate Group

2

Revenue 1,090.6 289.7 362.6 0.0 1,704.6 EBITDA 138.7 53.7 51.2 (15.6) 228.0 Depreciation (19.0) (18.0) (14.0) (2.5) (53.5) Amortisation (5.6) (4.1) (3.4) (1.3) (14.4) EBIT 114.1 31.6 33.8 (19.4) 160.1

1 Medical Centres includes Healius Medical Centres, Health & Co, Dental, IVF and Montserrat 2 $42.8m of inter-company revenue/expenses have been eliminated at the Group level (FY18 $38.3m)

Underlying v reported reconciliation

30

FY 2019 $m Reported Restructuring/strategic initiatives and other Impairment Underlying EBIT 117.4 49.9 0.0 167.3 Finance costs (34.2) (34.2) PBT 83.2 133.1 Income Tax (27.3) (39.9) NPAT 55.9 93.2 FY 2018 $m Reported Restructuring/strategic initiatives and other Impairment Underlying EBIT 64.6 46.0 49.5 160.1 Finance costs (35.1) (35.1) PBT 29.5 125.0 Income Tax (25.4) (37.5) NPAT 4.1 87.5

• Strategic initiatives: Pathology platforms ($10.3m), Leapfrog ($13.1m), iCAR ($3.1m) and corporate renewal ($9.2m)
• Business set-up costs inc. Montserrat, Health & Co deferred consideration ($5.1m)
• Restructuring and redundancies ($3.1m)
• Other: rebranding, corporate defence ($6.0m)

FY 2019 Results

EBIT BAU reconciliation

31 FY 2019 Results

3-year ramp-up is assumed for greenfield sites. It excludes brownfields, quasi-brownfields (Kawana and Highfields) and Imaging hospital contracts.

FY 2019 openings FY 2018 openings FY 2017 openings Monserrat Day Hospitals

Westside Private Hospital (inc. Westside Haematology and Oncology Centre) Western Haematology and Oncology Clinic Albany Day Hospital

Healius Medical Centres

Craigieburn Greensborough (inc Day Surgery) Narellan Robina (opened 7/18)

Healius Medical Centres

Corrimal

IVF

Perth IVF & Day Surgery

IVF

Brisbane IVF

Imaging

Highfields

Imaging

Kawana

Imaging

River City

Business as usual analysis FY 2019 $m FY 2018 $m Better/ (worse) % Underlying EBIT 167.3 160.1 4.5 Medical Centres - new centres 10.7 13.0 Imaging - new centres 1.8 1.8 EBIT Business as Usual 179.8 174.9 2.8

Accounting change AASB 15

32 FY 2019 Results

• Healius has adopted AASB 15 effective from 1 July 2018
• AASB 15 establishes a single model for entities to use in accounting for revenue from contracts with customers
• Under AASB 15 consideration payable to a customer is accounted for as a reduction to the transaction price
• Previously upfront payments made to healthcare professionals on entering into contractual relationships were accounted for as intangible

assets and amortised over the term of the relevant contract

• Under AASB 15, upfront payments made to healthcare professionals are recognised as contract assets and as a reduction to revenue over

the term of the relevant contract

• The financial impacts of the changes are a reduction in revenue and EBITDA:
• $35.4m - Medical Centres
• $4.1m - Imaging
• Nil EBIT impact

Accounting change AASB 16

33 FY 2019 Results

• AASB 16 will remove the distinction between operating and finance leases
• On Balance Sheet, almost all leases (except for short-term leases / leases of low value assets) will be recognised as an asset and a liability
• On the P&L, current operating leases will have interest and depreciation charged instead of property rental expense
• Expense for an individual lease will be higher in earlier periods when the interest expense on the outstanding liability is higher
• Preliminary assessment of the initial impact on Balance Sheet at 1 July 2019:

$bn

• Right-of-Use Asset

1.1

• Lease Liability

1.2

• It is expected that there will be a material improvement in EBITDA and EBIT
• Healius will initially apply the new standard using the modified retrospective approach, which requires no restatement of comparative

information

Appendices Medical Centres

Additional Information

5 10 15 20 25 30 (90) (40) 10 60 110 160

1H16 2H16 1H17 2H17 1H18 2H18 1H19 2H19 GP capex ($m) # of GPs

Joiners (LHS axis) Leavers (LHS axis) HLS initiatives After-tax capex (RHS axis)

35 FY 2019 Results

Healius Medical Centres GPs - Recruitment

Healius Medical Centres GPs - Key Drivers

36 FY 2019 Results

1 Historical figures restated to include skin and immediate care GPs 2 FTEs based on 40-hour week, 47-week year. GPs consistently work more than contracted hours 3 Revenue shown after impact of AASB 15. Includes revenue earned by registrars who are employed rather than under contract and not included in GP numbers (FY19 38 registrars) 4 19% of new GPs and 25% of re-signs have opted for up-front payments.

GPs FY 2019 FY 2018

1

FY 2017

1

Better/(worse) % FY19-FY18 Headcount 1,164 1,061 1,045 9.7 FTEs

2

992 950 964 4.4 Gross billings ($m) 430.2 430.0 419.9 0.0 Share of revenue (%)

3

32.2% 33.2% 33.9% (100) pp Revenue ($m)

3

138.3 142.9 142.3 (3.2) GP capital expenditure

4

28.7 24.9 27.4 15.3

Healius Medical Centres - Tax implications of HCP acquisitions

$m FY 2019 FY 2020 Additional Accounting Tax Expense 4.9 2.0

Healthcare Professionals contracted on or after 1 July 2015

• Deferred tax liability (DTL) to be recognised at the time of the acquisition of healthcare practices and capitalisation of contractual relationship

intangible assets.

• Equal movement in DTL will ensure an effective tax rate of 30%.

Healthcare Professionals contracted prior to 30 June 2015

• No DTL was recognised regarding the acquisition of healthcare practices and capitalisation of contractual relationship intangible assets.
• Therefore there is a non-deductible (permanent) difference which increases the notional effective tax rate above 30%. This has progressively

decreased as the associated amortisation expense has run off and will cease in FY 2020.

• The additional accounting tax expense is as follows:

37 FY 2019 Results

This presentation has been prepared by Healius Limited (ACN 064 530 516) (‘HLS’). Material in this presentation provides general background information about HLS which is current as at the date this presentation is made. Information in this presentation remains subject to change without notice. Circumstances may change and the contents of this presentation may become outdated as a result. The information in this presentation is a summary only and does not constitute financial advice. It is not intended to be relied upon as advice to investors or potential investors and has been prepared without taking account of any person’s investment objectives, financial situation or particular needs. This presentation is based on information made available to HLS. No representation or warranty, express or implied, is made in relation to the accuracy, reliability or completeness of the information contained herein and nothing in this presentation should be relied upon as a promise, representation, warranty or guarantee, whether as to the past or future. To the maximum extent permitted by law, none of HLS or its directors,

• fficers, employees, agents or advisers (HLS parties) accepts any liability for any loss arising from the use of this presentation or its contents or
• therwise arising in connection with it, including, without limitation, any liability arising from the fault or negligence on the part of any HLS parties.

Those statements in this presentation which may constitute forecasts or forward-looking statements are subject to both known and unknown risks and uncertainties and may involve significant elements of subjective judgment and assumptions as to future events which may or may not prove to be correct. Events and actual circumstances frequently do not occur as forecast and these differences may be material. The HLS parties do not give any representation, assurance or guarantee that the occurrence of the events, express or implied, in any forward-looking statement will actually occur and you are cautioned not to place undue reliance on forward-looking statements. This presentation is provided for information purposes only and does not constitute an offer, invitation or recommendation with respect to the subscription for, purchase or sale of any security and neither this document, nor anything in it shall form the basis of any contract or commitment. Accordingly, no action should be taken on the basis of, or in reliance on, this presentation.

38 FY 2019 Results

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