3Q Earnings Presentation

Transcription

1 3Q Earnings Presentation

2 Summary Turnaround in earnings marks the quarter We report a marked improvement in earnings for the quarter ending 30 September The headline earnings read TL1.6M versus a net loss of TL0.8M reported for June quarter. The main drivers for earnings recovery are strong revenue growth in Ankara Sincan hospital (+33.2% YoY and +17.7% QoQ), our flagship, and improvement in occupancy at our new locations. Margins have returned to March quarter levels with risk now tilted towards the upside. We indeed expect further gains in margins driven by benefits from operating leverage at Akay and Demet. Our balance sheet remains healthy with strong capital and low leverage ratios despite investments. 2

3 Earnings update Earnings per share (TL) 3

4 Sales by quarter Strong growth at Sincan, our flagship, and increasing CUR at Akay have boosted sales TL in millions 4

5 Healthcare sales by location Ankara 28% Van 30% 3Q16 Ankara 38% 2Q16 Etlik 15% Akay 14% Erbil 1% Van Hayat 12% Etlik 20% Erbil 1% Van Hayat 8% Van 33% TL47.8M TL39.5M 3Q17 2Q17 Ankara 30% Etlik 13% Demet 2% Akay 23% Van 24% Van Hayat 7% Erbil 1% Ankara 27% Etlik 12% Demet 2% Van 25% Akay 24% Van Hayat 8% Erbil 2% TL59.5M TL55.0M 5

6 Investments and margin progression Gross, EBITDAR and EBITDA (%) 6

7 Investments and leverage progression Net debt to EBITDA Below-trend pickup in leverage post Akay and Demet 7

8 Investments and leverage progression Net debt to EBITDAR 8

9 Income statement summary Lokman Hekim summary financials 9M17 3Q17 1H17 2Q17 1Q Q16 9M16 3Q16 1H16 Income statement summary (TLm) Sales Of which healthcare Cos t of s a l es Of which healthcare Cash gross income Of which healthcare OPEX EBITDA Depreci a tion wri te off Net other i ncome EBIT Net i nteres t EBT Ta xes a nd tax credi ts Net income Mi nori ties Income available for shareholders

10 Margins September quarter EBITDAR margin is above 16% Lokman Hekim summary financials 9M17 3Q17 1H17 2Q17 1Q Q16 9M16 3Q16 1H16 Margins (%) Ca s h gros s (group) Ca s h gros s (hea l thca re) Staff cos t Cons uma bl es Rent EBITDAR EBITDA OPEX EBIT EBT Net

11 Balance sheet summary Book and market equity, capital ratios and leverage 9M17 3Q17 1H17 2Q17 1Q Q16 9M16 3Q16 1H16 Book and market equity (TLm) Book value of equity Net debt Market value of equity Minorities Enterpris e value Leverage and capital Net debt to s ales (x) Net debt to EBITDA (x) Net debt to equity (x) EV to s ales (x) EV to EBITDA (x)

12 ARPA (TL) Blended ARPA trending up driven by growing share of PMI and cash in total sales 12

13 Staff cost margin (%) We aim below 50% margin for both 2017 and

14 Consumables and supplies margin (%) We aim below 25% margin for both 2017 and

15 Rent margin (%) 15

16 Sales and EBITDA margin EBITDA margin recovers and reverts back to where it should be following the temporary decline 2Q 16

17 EBITDA margin plotted against the share of state medical insurance in total sales 17

18 Staff cost margin plotted against total cost 18

19 Cost of supplies and total cost 19

20 Investments update Room upgrades in Akay near completion. The construction in Etlik has commenced. Demet now has a dental clinic. Akay Work is near completion to upgrade technology, infrastructure and service quality Demet The roll-out is nearing end with new dental clinics now up and running. We expect acceleration in admissions. Etlik Long Term The construction to build the facility adjacent to our existing facility, which should nearly treble the capacity, has commenced in September, in line with budget. We will continue working towards our objective to improve brand awareness and invest in underserved cities with promising growth prospects of Anatolia. 20

21 2017 guidance - unchanged 2017 will be the first full year of our investments in Akay and Demet. We project 20-23% sales growth with % EBITDA margin Sales EBITDA TL million in consolidated revenues, up from TL195 million in 2016, consistent with 20-23% growth year on year TL million in EBITDA, up from TL27 million in 2016, consistent with 21-26% growth on the year Margin % in 2017 EBITDA margin versus 14% in We expect to reach 15% mark in 2018 DIV We do not foresee any change in our dividend policy 2017/

22 Background

23 Who we are and what we offer to investors 23

24 We are headquartered in Ankara, where we are also the leading private care provider 24

25 We are a member of External Quality Control Programs administered by BIO-RAD LABS (United States) and RANDOX LABS (United Kingdom) 25

26 Our hospitals and medical centers in Turkey and Iraq Ankara Etlik Ankara Sincan Ankara Demet Ankara Akay Facility Hospital Current capacity 35 beds Planned capacity 100 beds Facility Hospital Current capacity 210 beds Planned capacity 220 beds Facility Policlinic Current capacity 10 beds Planned capacity 10 beds Facility Hospital Current capacity 121 beds Planned capacity 140 beds Van Van Hayat Erbil, Iraq Facility Hospital Current capacity 218 beds Planned capacity 235 beds Facility Hospital Current capacity 65 beds Planned capacity 75 beds Facility Imaging Centre Current capacity 5 beds Planned capacity 5 beds

27 Our shares are quoted on Borsa Istanbul 27

28 Efficiency metrics in context Breakdown of sales by hospital Sales and EBITDA by physician (TL 000) Sales and EBITDA by treatment (TL) Sales and EBITDA by bed (TL 000) 28

29 Annual income statement highlights Lokman Hekim Engurusag Saglik financials and forecasts A 1 Sales Healthcare services Ankara Etlik Ankara Sincan Van Van Hayat Arbil Akay Demet Other sales Sales by payer 12 Social Security (SGK) SGK as pct of total sales Other Total Sales by treatment 17 Inpatient As percent of total (%) Outpatient Total Cash COGS Gross income Cash Opex EBITDA Depreciation EBIT Net interest Other income EBT Period tax Deferred taxes Net income Minorities Net income after minorities Dividends paid out Retained earnings

30 Share capital 24 million shares 30

31 Annual sales by location TL in millions 31

32 Longer- term objectives Our long term EBITDA margin objective is 15%. We intend to accomplish this target without compromising on service quality and brand name by 1 Turning regional cost differentials to our advantage Raising gradually the contribution of higher margin PMI business to our sales Improving pricing power with suppliers by taking advantage of economies of scale as we acquire and grow business Using our experience gathered in underpenetrated regions of the country to position in Central and Eastern Anatolia 32

33 Targeting underpenetrated cities in Turkey Cities underserved by healthcare providers Lowest 10 by private healthcare Lowest 10 by healthcare in total Number of private hospital beds per 10,000 Number of total hospital beds per 10,000 Sources: Turkish Ministry of Health, Industry reports, and Lokman Hekim Sources: Turkish Ministry of Health, Industry reports, and Lokman Hekim Sources: Turkish Ministry of Health, Industry reports, and Lokman Hekim 33

34 and cities with favourable demographics Young, old or fast The youngest 10 The oldest 10 Fastest growing Average age by major city as at 2014* Population growth from 2015 to 2023* (*) Turkish Statistics Institute (*) Official projections Sources: Turkish Ministry of Health, Industry reports, and Lokman Hekim 34

35 Turkey attractive healthcare demographics Healthcare spending as percent of GDP Obesity prevalence Percentage of population over Diabetes prevalence Turkey World Sources: WHO, Industry reports, and Lokman Hekim estimates 35

36 Turkish healthcare growth set to outperform The sector in context sales CAGR (%) Sources: WHO, Industry reports, and Lokman Hekim estimates Growth in Turkish healthcare sector is projected to outperform the world average significantly with a 3YR view 36

37 Turkish healthcare industry data Doctors, dentists and nurses per 100K population Number of hospitals consolidation ahead? FDI to Turkish healthcare sector (USD m) Healthcare tourists in Turkey ( 000) Sources: WHO, Industry reports, and Lokman Hekim estimates Sources: WHO, Industry reports, and Lokman Hekim estimates 37

38 Turkish healthcare providers Breakdown of hospitals by ownership and geography State v private (%) Geographical breakdown of private hospitals Total hospital count as at 2014: 1,493 Private hospital count as at 2014: 550 Sources: Turkish Ministry of Health, Industry reports, and Lokman Hekim 38

39 Turkish healthcare general v speciality Breakdown of hospital beds by speciality General v speciality (%) Breakdown of speciality (%) Total bed count as at 2014: 200.0K Speciality bed count as at 2014: 23.1K Sources: Turkish Ministry of Health, Industry reports, and Lokman Hekim 39

40 Turkish healthcare in context Who pays for healthcare Healthcare spending by payer across OECD (%) Sources: WHO, Industry reports, and Lokman Hekim estimates 40

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42 Legal Notice This document contains " prospective statements". Except for retroactive information, all statements including but not limited to the statements about group s operations, financial position and business strategies may contain prospective statements. In addition, prospective statements may be specified with prospective terms like "possibly", "inevitable", "expecting", "aim", "plan", "foresee", "estimate", "believe" ve "continue" in general. Though the company believes that the expectations specified in prospective statements are reasonable as of today s expectations, it does not guarantee that these expectations will be realized. Due to this uncertainty, our readers should not take action based on the prospective statements in question. These cautionary explanations will be applied as a whole for all written or oral statements that may be stated by us from now on. Lokman Hekim Group Consolidated Financial Statements can be reached from the following website