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Agenda 1 Background: Al Noor and Mediclinic combination 2 The UAE market in context 3 UAE healthcare in 5 years key trends 2
Al Noor Hospitals overview Operational snapshot Key highlights HOSPITALS 1 3 BEDS 2 296 Largest integrated private healthcare system in Abu Dhabi with growing presence in other Emirates and Oman DOCTORS 3 683 EMPLOYEES 4 4,162 Provides services across the broad spectrum of primary and secondary care and continues to expand into selective tertiary services Historical financials (US$m) 449 365 324 293 241 49 65 71 83 98 2010 2011 2012 2013 2014 Revenue EBITDA CAGR 4 16.8% 18.6% Strategically located facilities across the Emirates, including 3 hospitals, 21 freestanding medical centres and an oncology centre Impending expansion of medical centre network (7 centres planned to open by 2016) as well as of hospitals (including 1 new hospital in Al Ain and additional capacity in existing ones) Source Company Notes (1) As of December 2015 (2) HAAD-licensed beds (3) as of June 2015 (4) 2010-14 CAGR 3
Mediclinic / Al Noor combination Creation of the 3 rd largest private healthcare group worldwide (excl. US) and 1 st healthcare player in the UAE Attractive healthcare market dynamics Favourable demographic trends coupled with increasing incidence of lifestyle-related disease and growth in private health insurance Creation of leading platform Clear leader in the attractive UAE healthcare market, with complementary fit across Abu Dhabi and Dubai Strong platform to drive further growth in the UAE UAE leadership Operational fit Al Noor s quality focus complements Mediclinic s premium service offering Strong financial track record and future growth potential Operational efficiencies Al Noor has demonstrated a strong financial track record of sustained growth and is pursuing a number of attractive opportunities for future expansion Meaningful synergy potential through Group procurement and combination of corporate functions Further diversification internationally Financial & Trading Platform Creates a leading international healthcare group with deep operational expertise Combination enhances geographic profile towards growth markets Provides Mediclinic with additional US$-based, high-growth earnings Combined business benefitted from a premium listing on the LSE, together with a listing on the JSE Improved access to global investors and improved liquidity of stock Likely reduction in cost of capital for Enlarged Group Enlarged group, Mediclinic International, has been included in the FTSE 100 Index in March 2016 (current market cap of c.us$9.6bn) 4
Agenda 1 Background: Al Noor and Mediclinic combination 2 The UAE market in context 3 UAE healthcare in 5 years key trends 5
Macroeconomic overview Strong growth expected in the GCC Favourable demographic trends 2015 GDP (US$bn) 2015 pop. 369 1,071 2,849 2,423 17,938 3,356 1,815 4,122 9 44 65 64 322 81 60 127 (m) 5.6% 9.7% 5.3% 5.1% 4.6% 4.4% 4.0% 3.9% 1.4% 1.7% 0.6% 0.4% 0.7% Large health expenditures to bridge the gap with developed countries 2015 exp. (US$bn) UAE GCC UK France US Germany Italy Japan Nominal GDP CAGR (2015-2020) Population CAGR (2015-2020) 15 45 237 279 3,121 359 155 424 6.1% 8.2% 4.8% 5.2% 4.8% 4.8% 2.9% 2.5% (0.1)% (0.0)% (0.2)% UAE GCC UK France US Germany Italy Japan UAE private sector is the most developed in the GCC 60% 40% 29% 71% 11% 89% 65% 35% 79% 21% 71% 29% 46% 54% 81% 19% UAE GCC UK France US Germany Italy Japan Healthcare expenditure CAGR (2015-2020) UAE GCC UK France US Germany Italy Japan Public hospitals Private hospitals Source Business Monitor International (Q1 2016), World Health Organisation Notes (1) Weighted average based of DP of KSA, Kuwait, Qatar, Bahrain and Oman (2) Weighted average based on population of KSA, Qatar and Oman (Kuwait and Bahrain not available) 6
UAE regulatory healthcare structure Ministry of Health (MOH) Dubai Abu Dhabi Other Emirates Regulator Dubai Health Authority (DHA) Health Authority Abu Dhabi (HAAD) MOH Regulation Medical insurance Compulsory Compulsory Voluntary Law Providers DHA / Private SEHA / Private MOH / Private Services Population insured (%) c.50% 98% 50% Population without health insurance 1 c.1,503k c.57k c.1,872k Fragmented and complex administration system in the UAE Source Daman, The Prospect Group, Shuaa Capital Note (1) Data refer to 2013 7
Public vs. private delivery Inpatient Claims value (2011) Outpatient Claims value (2011) 35% 57% 20% 60% 75% 41% 80% 65% 43% 40% 25% 59% Abu Dhabi Dubai Other Emirates Abu Dhabi Dubai Other Emirates Public Private Public Private The share of the local market served in each zone depends on the capacity of the public and private sector Significant government presence in the UAE healthcare market Excluding Dubai, over 60% of the hospitals are owned and operated by the government Healthcare centres, pharmacies and laboratories are largely dominated by private providers Source Daman, HAAD Statistics 2011, DHA Annual report 2011, TCO Management Consulting (an overview of UAE healthcare sector 2012) 8
Evolution of the Abu Dhabi model of care In 2006, Abu Dhabi defined a vision to deliver worldclass quality care in response to citizen's needs It has since introduced tiered mandatory health insurance for all residents linked to a single standard payment system for both public and private providers The reform program has improved access, by giving all residents health cards. The approximate doubling of demand has been matched by flexible supply Abu Dhabi is leading the way in the GCC Framework A framework to assess and guide the development of quality indicators Metrics Metrics for each dimension of the framework Measurement & validation Compliance & accountability Methodologies to measure accurate data Mechanisms to ensure the compliance of the outcomes with the objectives of the healthcare system Intervention Cross-cutting enablers to enhance system quality e.g. training or turnaround HAAD is in the process of implementing a new quality framework to improve the quality of the services delivered across the Emirate Source HAAD - Improving quality of healthcare in Abu Dhabi through monitoring and ensuring compliance (November 2015) 9
Focus on Abu Dhabi model of care Examples of patient types Patient 1 Patient 2 Patient 3 Medical condition: tetanus, not vaccinated Course of action: goes to the ER, which is overcrowded Medical condition: diagnosed with cancer Course of action: travels to US to get treatment, fully paid by Government Medical condition: in need of long-term care Course of action: has occupied the hospital for the last 5 years Current gaps in the model of care No systems for patient self-care, leading to overservicing, over-supply and inappropriate service use Limited integration of information systems Subacute care not fully aligned yet Trend in long-term care patients occupying acute beds Diagnostic services not optimally integrated into treatment paths Current capacity gaps: Psychiatry, procedural care, general practice and primary care, long-term non acute care Working towards an improved model of care Reduction of ER overcrowding Promotion of proactive check-ups and convenient routine follow-ups to help prevention of diseases Strengthening of self-care, supported by welldeveloped primary and subacute care Improvement of data system and utilisation management Promotion of the use of home care and telemedicine to improve screening systems Expansion to tertiary and quaternary services Increase focus on less developed areas (e.g. rural areas, Western Region) Government of Abu Dhabi is working on healthcare reforms to deliver an improved model of care Source Health Authority Abu Dhabi 10
Insurance schemes in Abu Dhabi Payor mix Abu Dhabi market (2014) Outpatient Inpatient Basic 28% Enhanced 38% Basic 25% Thiqa 42% Thiqa 34% Enhanced 33% Insurance schemes Thiqa (UAE nationals) Access to all public and private sector facilities in Abu Dhabi Funded by Government with TPA provided by Daman Enhanced package (expatriates) Offered by all insurance companies Covers employees with monthly salaries > AED5,000 (c.us$1,400) Mandatory requirement to cover spouse and up to three dependents Basic Originally designed for blue collars labourers Daman is the TPA, cost shared employers and government Covers employees with monthly salaries < AED5,000 (c.us$1,400) Source Health Authority Abu Dhabi 11
Dubai healthcare system Impact of the mandatory healthcare insurance Insurance fund to providers (US$m) Insured member base ( 000) 1,280 4,000 590 690 2,900 2,165 2013 Newly available funds 2016 2013 New members 2016 Note Payout as at 80% of gross written premium Investment opportunities for existing and new players to enhance access, quality of care and services Challenge for providers to cope with rapidly growing membership base (i.e. individuals with insurance paid access) with very limited benefits and low reimbursement for services Possible regulatory interventions (e.g. introduction of price regulation and/or introduction of DRG rates, instead of fee for service) Source Daman National Health Insurance Company 12
Agenda 1 Background: Al Noor and Mediclinic combination 2 The UAE market in context 3 UAE healthcare in 5 years key trends 13
Key trends 1 Abu Dhabi Cost sharing initiatives to reduce government spending (i.e. UAE nationals will bear more costs) Utilisation control measures and quality metrics being rolled out Payers Dubai Implementation of mandatory health insurance Change in benefit structure post implementation of mandatory health insurance Rise in premiums for employers, associated to a richer benefit package Cost shifting initiatives to reduce government spending 2 Overall consolidation trend in the market Greater specialisation of medical services (currently, market is lacking specialised care) Delivery Abu Dhabi Dubai Government to maintain its market share Additional government development Further development of private sector Government of Dubai keen to help competition (e.g. creation of free zones) Expecting larger and stronger players in light of consolidation 3 Regulation A more centralised healthcare system would be the ideal boost for the UAE healthcare system However, given federal structure of the UAE, this is unlikely to happen in the near future 14
Thank you 15
Appendix 16
The UAE healthcare market Market dynamics and key trends Population of the UAE aged over 65 years is projected to increase by a CAGR of 19.6% (1) from 2014-20 Low healthcare spend as a % of GDP vs. global averages Increasing incidence of lifestyle-related medical conditions such as diabetes, obesity, cancer and neuropsychiatric conditions Service gaps in the current healthcare market, particularly OBGYN, paediatrics, neonatology, cardiology and oncology (2) Growth in the privately insured population in Dubai and the Northern Emirates such as the introduction of mandatory health insurance in Dubai Total healthcare spend 11.4 10.910.8 9.1 8.7 8.4 6.8 6.5 OECD Average: 9.0% 5.6 5.5 4.1 3.4 Obesity prevalence (3) Diabetes prevalence (4) As % of GDP % of Total Population % of Population Aged 20-79 Years 41.9 19.0 17.3 34.4 14.8 26.926.6 24.021.3 20.520.3 17.7 16.2 12.6 8.5 2.8 9.4 9.4 9.4 9.1 8.7 8.6 7.9 5.6 5.6 5.0 3.9 Source WHO, BMI (2014) Notes (1) According to Euromonitor International (2) Identified by HAAD relating to the Emirate of Abu Dhabi (3) Obesity defined as a body mass index (BMI) of 30 kg/m² or more. Obese population measured as the percentage of population aged 15 years or older (4) Diabetes prevalence refers to the percentage of people aged 20-79 years who have type 1 or type 2 diabetes 17
Healthcare supply across select countries Beds, nurses and physicians ratio per 1,000 capita 16 Developed markets GCC nations 14 13.4 12 11.4 10 9.6 9.3 4.7 6.6 8.3 9.9 9.5 8 7.4 6 4.6 4.5 4 2 3.0 2.4 2.9 3.4 3.2 2.1 3.7 3.0 2.8 1.1 2.7 1.5 2.2 2.1 0.9 1.8 3.9 1.5 2.0 1.8 1.8 2.0 1.2 2.8 - USA Holland France Canada Germany UK UAE KSA Bahrain Kuwait Oman Qatar Beds Nurses Physicians GCC countries exhibit a significant potential vis-à-vis developed markets in terms of healthcare supply Source Hub Healthcare: Medical Travel and Healthy Equity in the UAE, Sarath Ganji Working Paper, November 2015, World Development Indicators 2012, Colliers International Analysis 2013 18
JCI-accredited facilities in the UAE Facilities 140 120 116 100 102 80 82 60 40 33 42 49 55 20 14 18-3 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 The UAE have witnessed an extraordinary growth in specialised and accredited facilities over the past 10 years Source Hub Healthcare: Medical Travel and Healthy Equity in the UAE, Sarath Ganji Working Paper, November 2015 19
Insurance landscape in the UAE Competitor analysis Abu Dhabi market share (enhanced members) Dubai market share (2014 members) Orient 2.7% Al Wathba 2.9% Al Hilal Takaful 3.9% Al Dhafra 8.8% ADNIC 9.6% Oman 10.7% Insurance House 2.2% Others 17.4% Green Crescent 1.8% Daman 40.0% ALICO 9% Daman 9% Aetna 5% NGI 8% AOI 10% Adnic 5% Axa 12% Other 27% Oman 15% The top 3 insurers account for 60% of the market, with Daman taking the lion s share (c.40%) Between 2012 and 2013, Daman Enhanced members market share increased by 6.5% points Oman Insurance Company is the leading health insurance company in Dubai Daman has increased its market share from 6% in 2013 (31,000 members) to 9% in 2014 (126,000 members) Source HAAD statistics Source HAAD statistics Note (1) Total estimated Dubai Enhanced market = 1,472m members as per DHA Mandate implementation timelines 20
Impact of mandatory health insurance Development of Daman enhanced plans Projection on health insurance cost 170 160 +57% 150 8.0% 8.8% 140 6.0% 6.6% 7.3% 130 120 100 112 125 141 157 110 100 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Index Burning Cost (regional) Index Burning Cost (UAE) Health insurance cost (rebased to 100) % of payroll (index) 6% of health insurance benefits as percentage of total payroll in the UAE in 2011 Assumptions: Healthcare benefit cost 2014 = 100 Medical inflation 12% p.a. Payroll inflation 2.5% p.a. Note Total cost for employer is dependent on whether dependents will be covered or not Employers need to prepare for higher OPEX to fund and sustain health insurance benefits over time Source Daman (UAE Health Insurance Sector November 2015), The Prospect Group, Shuaa Capital 21