FINANCIAL RESULTS PRESENTATION H1FY18

Virtus Health (ASX:VRT) FINANCIAL RESULTS PRESENTATION H1FY18 Tuesday 20 th February, 2018 9.15am AEDT

DISCLAIMER The material in this presentation has been prepared by Virtus Health Limited ABN 80 129 643 492 ( Virtus Health ) and is general background information about Virtus Health s activities current at the date of this presentation. The information is given in summary form and includes financial and other information and does not purport to be complete. Information in this presentation, including forecast financial information should not be considered as advice or a recommendation to investors or potential investors and does not take into account investment objectives, financial situation or needs of any particular investor. These should be considered, with or without professional advice when deciding if an investment is appropriate. Persons needing advice should consult their stockbroker, solicitor, accountant or other independent financial advisor. The release, publication or distribution of this presentation in certain jurisdictions may be restricted by law and therefore persons in such jurisdictions into which this presentation is released, published or distributed should inform themselves about and observe such restrictions. This presentation does not constitute, or form part of, an offer to sell or the solicitation of an offer to subscribe for or buy any securities, nor the solicitation of any vote or approval in any jurisdiction, nor shall there be any sale, issue or transfer of the securities referred to in this presentation in any jurisdiction in contravention of applicable law. Certain statements made in this presentation are forward-looking statements. These forwardlooking statements are not historical facts but rather are based on Virtus Health Limited s current expectations, estimates and projections about the industry in which Virtus Health operates, and beliefs and assumptions. Words such as anticipates, expects, intends,, plans, believes, seeks, estimates, and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors, some of which are beyond the control of Virtus Health, are difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. Virtus Health cautions investors and potential investors not to place undue reliance on these forward-looking statements, which reflect the view of Virtus Health only as of the date of this presentation. The forward-looking statements made in this presentation relate only to events as of the date on which the statements are made. Virtus Health will not undertake any obligation to release publicly any revisions or updates to these forward-looking statements to reflect events, circumstances or unanticipated events occurring after the date of this presentation except as required by law or by any appropriate regulatory authority. A number of figures, amounts, percentages, estimates, calculations of value and fractions in this presentation are subject to the effect of rounding. Accordingly, the actual calculation of these figures may differ from the figures set out in this presentation. In addition, a number of figures have been calculated on the basis of assumed exchange rates, as set out in this presentation. To the maximum extent permitted by law, neither Virtus Health nor its related bodies corporate, directors, officers, employees, agents, contractors, advisers nor any other person, accepts, and each expressly disclaims, any liability, including without limitation any liability arising from fault or negligence, for any errors or misstatements in, or omissions from, this presentation or any direct, indirect or consequential loss arising from the use of this presentation or its contents or otherwise arising in connection with it. 2

RESULTS & OPERATIONAL OVERVIEW H1FY18 3

H1FY18 Financial Results Highlights Revenue 1.8% $133.8m EPS 12.4% 20.62 cents EBITDA 9.7% $34.8m EBITDA Margin 1.9% NPAT attributable to ordinary equity holders 12.6% $16.6m Interim Dividend 14 cps fully franked 4 Virtus remains leader in an increasingly competitive domestic ARS market; our unique platform enables participation across all segments Headline earnings growth driven by consistent Australian ARS performance; continued growth in diagnostics & international activities supported by effective cost management Leading demographic drivers for fertility services continue to drive sector growth 4

AUSTRALIAN SEGMENT PERFORMANCE 5

Australian Operations Fertility 6 Australia s market leading Fertility Provider Overall market volume along eastern seaboard up 6.1% on pcp Driven by 24.4% growth in Queensland - underlying market growth 1.8% excluding QLD Virtus Australia overall cycle activity H1FY18 flat at 7,929 cycles Virtus NSW grew 8.0% outperforming market growth of 3.0% Virtus VIC grew 1.2% on pcp ahead of 0.3% market growth Virtus overall growth offset by market share loss in price sensitive QLD and TAS markets Virtus TFC activity increased 9.3% Service model and pricing reviews improved performance in VIC and NSW Margin and volume erosion in the price sensitive QLD market TFCs represent 13.7% of overall Virtus Australian activity (H1FY17:12.4%) Australian segment Revenue $111m in line with pcp Australian segment EBITDA up 6.2% to $36.0m (H1FY17: $33.9m) as a result of operational efficiencies and cost out initiatives Revenue and Australian segment EBITDA includes Diagnostics and Day Hospitals Australian IVF Cycles Source: Medicare Australia 6

Variability in Australian Market Growth 7 Annual growth rate variability is normal H1FY18 volume improvements following a subdued FY17 Annual Industry Growth rates (FY10-17) 10% 8% 6% 4% 2% 0% -2% 2010 2012 2014 2016 H1FY18-4% -6% -8% *Annual Growth Rates Market Volumes (HY13-18) 23,500 23,000 22,500 22,000 21,500 21,000 20,500 20,000 19,500 19,000 23,383 23,095 21,719 21,890 21,432 20,758 H1FY13 H1FY14 H1FY15 H1FY16 H1FY17 H1FY18 Number of IVF Cycles H1FY18 reflects national market growth of 5.5% over pcp to 23,095 cycles Underlying market growth is 1.8% (excluding QLD) * Growth rates to 2017 reflect annual growth rates H1 growth rates reflect December 2018 year to date growth Australian IVF Cycles Source: Medicare Australia 7

Australian Operations Diagnostics 8 Strong revenue and EBITDA growth Diagnostic revenue increased 5.8% and EBITDA increased 31.2% over pcp EBITDA growth driven by significant operational improvements in FY17 Revenue growth reflects Stronger IVF activity Continued growth of PGD/PGS up 27.3% - utilisation at 18.9% of fresh cycles H1FY18 (H1FY17: 12.3%) 6% increase in new referring Doctors Focus on further growth through; Next Generation Sequencing, genetic screening and expansion of PGD/PGS services externally Expanded pathology testing platform Expanded general pathology collection centre footprint Expansion of Virtus Diagnostic services in Tasmania & ACT 8

Australian Operations Day Hospitals 9 Day Hospital revenue increased 2.0% Increase mostly reflects IVF activity in NSW and VIC Decrease in Non-IVF procedure revenue of 1.3% on pcp across all day hospitals Continued focus on Non-IVF surgical relationships & services to improve utilisation in FY18 Virtus Maroubra fertility clinic, laboratory and day hospital relocation to new facility in Alexandria, NSW to be completed in 2018 Artist impression 9

INTERNATIONAL SEGMENT PERFORMANCE 10

International Operations 11 International segment remains key to our diversification strategy International segment EBITDA up 74% to $4.6M driven by Aagaard acquisition in Denmark Improvements to Singapore performance Overall international revenue is now 16% of total revenue Higher level of local management and leadership to Improve operational performance; and Drive M&A activities 11

Irish Operations 12 EBITDA impacted by softer H1FY18 volumes 1,099 cycles performed in H1FY18 (H1FY17: 1,170) reflecting lower activity at SIMS Revenue down 3.0% to 10.7m (local currency) EBITDA (local currency) down 6.7% on pcp as a result of softer volume and market rent reviews First put option to acquire a further 15% stake in SIMS group was exercised in October 2017 12

Danish Operations 13 Aagaard Fertility Clinic consolidates and delivers Successful integration with Virtus demonstrating value of collaborative medical & scientific model 254 fresh cycles; revenue DKK12.4m; EBITDA DKK6.9m Further Scandinavian opportunities being explored 13

Singapore Operations 14 Increased cycles drive positive EBITDA 202 cycles performed in Singapore in H1FY18 (H1FY17: 172) H1FY18 EBITDA SG$245,000 compared to pcp loss of SG$192,000 (local currency) Scientific approach driving successful patient outcomes attracting doctors and patients alike Five contracted doctors plus four associated specialists utilising the facility 14

FINANCIAL RESULTS H1FY18 15

Summary Income Statement 16 Statutory and adjusted results Statutory Results Adjustment Adjusted Results A $ millions H1FY18 H1FY17 H1FY18 H1FY17 H1FY18 H1FY17 Revenue 133.8 131.4 133.8 131.4 Segment EBITDA 40.6 36.5 40.6 36.5 EBITDA 34.8 31.7 0.3 (0.3) 35.1 31.5 Depreciation and amortisation (6.1) (6.0) (6.1) (6.0) EBIT 28.7 25.7 0.3 (0.3) 29.0 25.4 Interest (3.9) (3.9) 0.5 0.5 (3.4) (3.4) Profit before income tax 24.8 21.8 0.8 0.2 25.6 22.0 Income tax expense (7.5) (6.2) (0.1) (7.5) (6.3) Profit after income tax 17.3 15.6 0.8 0.1 18.1 15.7 Profit after income tax attributable to non-controlling interest (0.7) (0.9) (0.7) (0.9) Profit after income tax attributable to ordinary equity holders 16.6 14.7 0.8 0.1 17.4 14.8 Earnings per share (cents) 20.62 18.35 Diluted Earnings per share (cents) 20.48 18.21 Notes: Shaded area indicates IFRS disclosures H1FY18 Financial Statements; refer next page for reconciliation of detailed adjustments from statutory profit to adjusted profit. 16

Statutory Profit Reconciliation to Adjusted Profit 17 Net loss from non-cash transaction adjustments and transaction expenses - $0.8m $ Million H1FY18 H1FY17 Profit after income tax attributable to ordinary equity holders 16.6 14.7 Fair Value Adjustment to put liabilities 0.0 (0.5) Fair Value Adjustment to contingent consideration 0.0 (0.5) Non Cash Interest 1 0.5 0.5 Transaction costs 0.3 0.8 Tax-effect on all adjustments 0.0 (0.1) Adjusted NPAT 17.4 14.8 Notes: 1. Non cash interest relates to the unwinding of the discount on the put liabilities and contingent consideration. 17

Key Revenue and EBITDA Drivers for H1FY2018 18 EBITDA margin improvement 1.9% H1FY14-18 Revenue H1FY14-18 Group EBITDA 132.3 131.4 133.8 32.0 32.8 36.2 31.7 34.8 114.5 101.2 H1FY14 H1FY15 H1FY16 H1FY17 H1FY18 1H FY18 Revenue driven by: Strong NSW full service and TFC performance Improvement in VIC full service and TFC volumes Strong Diagnostics revenue growth First time contribution from Aagaard Partially offset by: QLD market share loss TAS market share loss H1FY14 H1FY15 H1FY16 H1FY17 H1FY18 1H FY18 EBITDA driven by: Successful implementation of cost out and operational efficiency initiatives outlined late FY17 Strong recovery in VIC profitability Strong EBITDA growth in Diagnostics Positive Singapore EBITDA Partially offset by: Loss of market share and margin erosion in QLD Increased competition in weaker TAS market 18

Cash Performance 19 Strong Operating cash flow Summary (A$m) H1FY18 (A$m) H1FY17 (A$m) Group EBITDA 34.8 31.7 Changes in other operating assets /liabilities* 3.9 (8.0) Net financial costs (3.2) (3.3) Income Tax (5.2) (4.9) Other 0.4 0.6 Operating Cash Flow 30.7 16.1 Net CAPEX (5.6) (4.6) Payment for acquisition of non-controlling interest (7.4) 0.0 Voluntary debt repayment (6.0) 0.0 Operating cash flows used to fund: Capex of $5.6m Exercise of the first put option to acquire a further 15% of the SIMs Group (Ireland) of $7.4m Dividends of $9.6m Voluntary debt repayment of $6m Free Cashflow 11.7 11.5 Dividends paid (9.6) (12.1) Free Cash Flow after dividends 2.1 (0.6) *excludes non cash adjustments (share based payments, non-cash interest and forex) 19

Statement of Financial Position 20 A $ millions Statutory Dec 17 Statutory June 17 Cash 28.7 27.3 Trade and other receivables 9.8 12.3 Inventories 0.8 0.7 Equity accounted investments 1.5 1.5 Other financial assets 3.5 3.0 PP&E 29.2 29.0 Deferred tax assets 4.9 4.6 Intangible assets 412.7 411.5 Total Assets 491.1 489.9 Trade and other payables 23.7 22.1 Deferred revenue 8.1 8.2 Borrowings 147.7 153.6 Deferred tax liability 0.6 0.6 Provisions 9.8 9.8 Current tax liabilities 3.0 0.4 Other financial Liabilities 20.2 26.8 Cash balance At normal level after utilisation of excess cash on Capex/Put option exercise, dividends and a voluntary debt repayment of $6m Gearing Leverage ratio of 1.9x adjusted group EBITDA (LTM) Full compliance with sufficient head room under both interest cover and leverage ratios Funding capacity available, $67m reflecting $57m of unused facilities and $10m of uncommitted cash Other financial liabilities decrease as a result of the exercise of the first put option to acquire a further 15% of the SIMs Group in Ireland Dividend proposed 14 cps, (pcp13 cps) fully franked payable on 17 th April 2018 Total Liabilities 213.1 221.5 Net Assets 278.0 268.4 20

STRATEGY & OUTLOOK VIRTUS HEALTH #1 FOR FERTILITY Creating more chubby cheeks than anyone else 21

Virtus Health Strategy 22 Purpose: To help women and men achieve their aspirations to create a family Leading minds, leading science Ambition Growth Strategy To be a leading global provider of ARS based on; Extraordinary care: our patients being at the centre of everything we do Clinical & scientific effectiveness Breadth of capability across ARS value chain Market leadership in chosen geographies & market segments ARS (Domestic & International) Market penetration by acquisition, greenfield & organic growth Patient centric care Research driven service development Diagnostics (Domestic) Leverage fertility, genetics & general pathology testing footprint Maximise diversification opportunities Day Hospitals (Domestic) Optimise utilisation & efficiency Opportunistic domestic acquisition 22

Strategic & Operational Priorities 23 Virtus is well placed to manage industry challenges and variability Strategic Priorities Extraordinary patient care Continue to drive shareholder value through organic growth and acquisition activity in Europe Operational Priorities Australian Fertility Business Diagnostics & Day Hospitals International Accelerate scientific and technology advances to deliver extraordinary patient care and outcomes Tailored clinical and service delivery models (QLD, TAS, Regional NSW) Operational efficiencies Relocation to purpose built fertility clinic and laboratory in Alexandria NSW Diagnostics Expand genetic & pathology service Grow external referrers Expand collection centre footprint Day Hospital Increase business development to target non-ivf procedural growth Expansion of day hospital services at Alexandria, NSW Continue to grow our international network Focus on revenue growth in niche market segments and targeted geographies Develop and enhance reputation within existing footprint 23

Conclusion 24 ARS is a long-term growth market Demographic drivers for ARS growth remain favourable globally Virtus diversified model, scale & geographical reach provides an unrivalled platform for participation in all key fertility segments Significant operational changes have strengthened domestic profitability Continued strong profit growth from diagnostics particularly in genetic screening Drive shareholder value through organic growth and international acquisition Virtus is well positioned for continued growth 24

APPENDICES 25

KPIs Australian Segment 26 Virtus Note H1FY18 H1FY17 Change Number of IVF Cycles in Virtus Australia 1 7,929 7,972 (0.5%) TFC cycles as a percentage of total Virtus IVF cycles 13.7% 12.4% 1.3% Number of IVF Cycles in NSW, QLD, TAS, VIC, ACT market 19,804 18,665 6.1% Eastern states market share 1 40.0% 42.7% (2.7%) National market share 1 34.3% 36.4% (2.1%) Treatment volume 2 15,405 15,416 (0.1%) Average number of Fertility Specialists 109 105 3.3% Average number of cycles per Fertility Specialist 73 76 (3.7%) Average age of Fertility Specialists 52 50 3.7% Average total revenue per cycle (A$) 13,973 13,940 0.2% Labour as a % of total revenue 31.4% 31.2% (0.2%) Provider fees as a % of total revenue 15.1% 15.3% 0.2% Reported segment EBITDA margin % 32.3% 30.3% 2.0% Notes: 1. Implied last six months market share is based on fresh and cancelled cycles in NSW,VIC, QLD, TAS and ACT 2. Total treatments includes fresh cycles, cancelled cycles, IUIs and FETs 26

Virtus International Expansion 27 International Diversification 27

Treatment Analysis 28 Treatment Mix Virtus Cycles 12% 7,346 8,448 785 7,617 7,663 9,782 1,272 8,510 9,339 9,484 1,367 1,555 7,972 7,929 35% 53% HFY13 HFY14 HFY15 HFY16 HFY17 HFY18 Australian Cycles International Cycles Cycle Frozen AI/OI 28

Regulatory Environment 29 Australia Federal Health Department review of Medicare Benefits Schedule ongoing Medical Services Advisory Committee(MSAC) review of PGD funding ongoing Ireland Government considering funding for fertility services currently privately funded Proposed change to Children & Family Relationships Act 2015 precluding anonymous egg donation Singapore Ministry of Health consulting with health professionals on PGD/PGS access in Singapore Denmark Favourable changes to donor services and international use of gametes 29

VIRTUS HEALTH NETWORK OF CARE 30 ASSISTED REPRODUCTIVE SERVICES SPECIALISED DIAGNOSTICS DAY HOSPITALS 46 FERTILITY CLINICS Australia 41 Ireland 3 Singapore 1 Denmark 1 62 LABORATORIES Embryology 26 Andrology 29 General Pathology 5 Genetics 2 6 DAY HOSPITALS H IVF and non-ivf procedures H 951 124 231 FERTILITY SPECIALISTS NURSES, COUNSELLORS, PATIENT SUPPORT (incl DIAGNOSTICS) SCIENTISTS 30

THANK YOU