Ramsay Health Care Limited: Annual General Meeting Managing Director & CEO Craig McNally 14 November 2018 ramsayhealth.com
Ramsay Health Care Operations in FY 18 25,500 Hospital Beds 235 Facilities 64,000 Employees 3,500,000 Admissions per annum 54 Community Franchise Pharmacies Hospitals & Facilities In FY 18 Ramsay Health Care operated 235 hospitals, day surgery centres, treatment facilities, rehabilitation & psychiatric units across three continents, admitting 3.5 million patients. 2
Capio joins the Ramsay network In November 2018, the pan European healthcare operator, Capio AB, joins the Ramsay network. 13,500 Employees 189 Facilities 5,100,000 Patient attendances per annum Denmark 5 hospitals 6 specialist clinics France 19 hospitals 3 specialist clinics Norway 8 hospitals 3 specialist clinics Germany 5 hospitals 4 specialist clinics 7 primary care units Sweden 3 hospitals 43 specialist clinics 83 primary care units 3
FY2018 Financial Highlights REVENUE $9.2 billion Up 5.4% on previous year EBIT $1.008 billion CORE NPAT $579.3 million CORE EPS 279.8 cents FULL YEAR DIVIDEND, FULLY FRANKED 144.0 cents Group earnings before interest & tax up 6.8% on previous year Core net profit after tax up 6.8% on previous year Core earnings per share up 7.0% on previous year Full year dividend (fully franked) up 7.1% on previous year 4
Consistent history of earnings growth Core Net Profit after Tax (NPAT) (A$m) Core Earning per Share (EPS) (cents per share) Total Dividend (cents per share) 412.1 481.4 542.7 579.3 196.6 231.4 261.4 279.8 FY15 FY16 FY17 FY18 FY15 FY16 FY17 FY18 Total dividend (cents per share) Final dividend (cents per share) Interim dividend (cents per share) 134.5 144.0 119.0 101.0 86.5 81.5 72.0 60.5 40.5 47.0 53.0 57.5 FY'15 FY'16 FY'17 FY'18 Core NPAT up 6.8% to $579.3m Core EPS up 7.0% to 279.8 Full year dividend fully franked, up 7.1% on previous year 5
Operating Environments
Australia Australian hospitals performing well despite industry headwinds, demonstrating strength and diversity of portfolio. Industry being impacted by affordability and ongoing negative focus on private health insurance In FY 18 maintained admissions growth above industry but below long term trend Admissions growth remains below our long term average Lower growth from Australian brownfields in FY 18 - investment focus on upgrading existing facilities but approved record level of brownfields in FY 18 Maintaining focus on innovation and cost optimization strategies Long term industry fundamentals will continue to drive demand for healthcare Australia 72 7
France & Italy Improvement in operating environment for private hospitals in France. Overall admissions growth particularly in mental health, ambulatory care and emergency presentations Achieved a leadership position in digitalisation of the patient journey, quality and safety Large scale restructuring programme to centralise non-core hospital functions is on track Changes to health funding anticipated to align with quality & value - RGdS is recognized as best in class for quality & outcomes France 119 Italy 1 8
United Kingdom Challenging operating environment due to NHS cost constraints and referral management schemes. Significant downturn in NHS volumes Ramsay UK remains market leader in electronic GP referrals Focused on clinical leadership & cost efficiencies Significant extra funding recently announced for NHS United Kingdom 34 9
Asia Growing markets, remains competitive. Strong operating performance Cost controls key focus area Ramp up of brownfield developments A long term growth opportunity Malaysia 3 Indonesia 3 10
Group Initiatives
Strengthening the core: strong efficiency agenda Operational Excellence Implementation of LEAN to optimise workforce planning and theatre utilisation RGdS clustering & centralised support centres KPI benchmarking dashboards and apps Digitalisation RGDS digitalised patient pathway improving access Specialist profile search engine App providing patient information to doctors mobiles Electronic patient record rollout in UK Global Procurement Strong partnerships with local and global suppliers Continuing to drive benefits from procurement strategy Launched Ascension JV 12
Building a sustainable organisation Patient & Doctor Experience Clinical Excellence Innovation Developing our Staff Rolled out NPS Investment in our facilities Speaking up for Safety Digital solutions for patients Data collection & benchmarking Developing leading clinical trials network Centre of Excellence accreditation in our leading institutions Innovation Units created in France and Australia Targeting services beyond hospital walls App for doctors - real-time patient information via mobile Group Chief People Officer appointed Global talent development programmes Executive Leadership Development Programme Fast and secure WiFi rollout Investment in research Telemedicine services for clinical review of complex remote cases Best in industry LTIFR rates 13
Medical Research/Teaching & Training
Growth Strategy
Global Industry Fundamentals The number of people aged over 65 has increased to more than 656 million, or 11.5% of the total population Globally, chronic disease prevalence is growing quickly, most prominently, cancer, heart disease, and diabetes. 415M diabetics in 2018 expected to increase to 642M by 2040. Depression is the leading cause of ill health and disability worldwide. More than 300 million people are now living with depression, an increase of more than 18% between 2005 and 2015 In all regions, health spending is rising as populations grow and age, technologies improve and patients become better informed. Demand for health care is going to rise faster than the capacity of the sector itself. 16
Delivering on our growth strategy Continuing to create shareholder value through our focused strategy ORGANIC GROWTH Underpinned by demographics, quality portfolio of hospitals, ongoing business improvement and volume expansion. BROWNFIELD CAPACITY EXPANSION Local market knowledge drives business cases. We build capacity aimed at satisfying unmet demand. Apply strong financial discipline. PUBLIC/PRIVATE COLLABORATION S Global focus on increasing private sector role in service provision for publicly funded patients. ACQUISITIONS Exploring acquisitions in existing and new markets Ramsay has proven it can export its management model Must add long-term value to shareholders. NEW PLATFORMS FOR GROWTH Opportunities arising to supplement our core strategy by developing and delivering integrated care to patients across an increasingly disperse health ecosystem. 17
Brownfields
Projects in FY 18
Brownfield Projects FY 18 Completed Projects: Board Approved Projects during the period: $171m gross capital investment 21 consulting suites, $325m gross capital investment 39 consulting suites 208 Gross beds 204 Conversions 2 4 Net beds 7 operating theatres 340 Gross beds 111 Conversions 229 Net beds 24 operating theatres 20
Brownfields completing in FY 19 Most benefits expected from FY 20 onwards. $242.0m gross capital investment 30 consulting suites 333 Gross beds 117 Conversions 216 Net beds 15 operating theatres 1 emergency department 21
Acquisitions
Capio Acquisition Ramsay s 51% listed French subsidiary Ramsay Générale de Santé (RGdS) Offer for Nasdaq Stockholm-listed Capio AB (publ.) (Capio) received successful acceptance from Capio shareholders holding approximately 98.51% of the shares in Capio, at the close of the extended offer period on 7 November Unconditional clearance has been received from the French Competition Authority & all conditions for completion of the Offer were satisfied Settlement occurred on 7 November 2018 at which stage, Capio became a majority-owned subsidiary of Ramsay Générale de Santé 23
Key benefits of the transaction Acquisition of Capio s integrated healthcare network is consistent with Ramsay Health Care s strategy to grow both its hospital and out-of-hospital businesses Consistent with our strategy to grow our global portfolio in new markets and where it is a strategic fit: Capio is a leading and quality provider of healthcare services in Europe with a well-balanced geographic footprint across 5 countries, operating in stable markets with strong industry fundamentals Holds market leadership positions Leader in driving value-based healthcare, digitalisation and specialisation High performing French operations and strong presence in Toulouse & Lyon, enhancing RGdS cluster strategy Provides a gateway for further bolt-on acquisitions in the Nordics Core EPS accretive within 2 to 3 years 24
Expanded European footprint Combined geographical footprint with strong positions in key European markets. Revenue: 424m Patients (#, k): 200 FTEs (#): 4,324 Location (#): 34 Revenue: 871m Patients (#, k): 4,077 FTEs (#): 6,556 Location (#): 151 Revenue: 2,780m Patients (#, k): 2,759 FTEs (#): 27,292¹ Location (#): 141 Revenue: 117m Patients (#, k): 247 FTEs (#): 1,224 Location (#): 16 Ramsay Générale de Santé presence Ramsay Générale de Santé location Capio location RHC UK presence Ramsay Health Care UK location Revenue: 24m Patients (#, k): 6 Jun-18 LTM figures for RGdS, Capio and Ramsay Health Care UK Based on spot FX rates as of 26/10/2018 (EUR/AUD of 1.61 and EURSEK of 10.39) 1. Not including c.1,000 self-employed doctors at Capio and 6,000 self-employed doctors at RGdS FTEs (#): 198 Location (#): 1 25
Ramsay Health Care s Global Network post acquisition $11.6B Revenue (AUD) 480 Locations 77,000 Employees 8,500,000 Patient visits/admissions 11 Countries Hospitals & Facilities With Capio, Ramsay Health Care s global network extends across 11 countries, with 8.5 million admissions/patient visits to its facilities in c480 locations. The combined entity employs 77,000 staff. 26
Outlook
Outlook In FY 18 we focused on strategies to strengthen our business for the long term including large scale cost optimisation programmes as well as investment in people, innovation, facility enhancement and growth initiatives, and these are ongoing into FY 19. We expect growth initiatives including brownfields and investments aimed at strengthening our business, to contribute strongly to earnings beyond FY 19. Neutral impact from Capio acquisition in FY 19. Barring unforeseen circumstances, Ramsay continues to target positive Core EPS growth of up to 2% in FY 19. 28