Medsi Group of CompaniesFinancial Results for 1H13
22 August 2013
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Disclaimer
Certain statements in this presentation may contain assumptions or forecasts with respect to forthcoming events within the Medsi Group of Companies and its subsidiaries (“Medsi” or “the Group”). The words “expect”, “estimate”, “intend”, “will”, “could” and similar expressions identify forward-looking statements. We wish to caution you that these statements are only predictions and that actual events or results may differ materially. We do not intend to update these statements to reflect events and circumstances occurring after the abovementioned date or to reflect the occurrence of unanticipated events. Many factors could cause the actual results of Medsi to differ materially from those contained in our projections or forward-looking statements. Among others, these include deteriorating economic conditions, our competitive environment, risks associated with operating in Russia, rapid technological and market change in our industries, and many other risks specifically related to the Group and its operations.
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Medsi has completed the consolidation MCMGM and determined the development strategy for the Group as a full-cycle provider of medical services
Alexey Chupin appointed president of the Medsi Group of Companies. Previously, he was general director of pharmaceutical company Binnopharm, part of the AFK Sistema group.
Consolidation completed of the property and assets of Medical Center for the Mayor and Government of Moscow (MCMGM).
Conducted a comprehensive evaluation of all types of medical services provided by Medsi and determined a development concept for each area in accordance with international best practices.
The Group has reviewed its sales strategy of providing the full range of medical services. Medsi’s updated commercial policy envisions the accelerated development of direct sales of medical products.
Main events in 1H13
In 1H13, Medsi significantly improved its operational indicators, with revenues rising by more than 50%
Key indicators of the Group
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Indicator 1H13 1H12 change
Visits, ‘000s 2,917.5 2,206.3 +32.2%
Average ticket, US$ 47.7 43.4 +9.9%
Revenues, US$ mln 147.2 95.7 +53.8%
OIBDA, US$ mln 15.2 10.9 +39.3%
OIBDA margin, % 10.3 11.4 -1.1 pps
Net profit, US$ mln 0.4 -3.4 -
Growth in revenue and OIBDA was achieved mainly through a rise in the number of visits and an increase in the average ticket, linked primarily to the consolidation of the Group’s new assets
Revenues, US$ mln
OIBDA, US$ mln
Net profit, US$ mln
OIBDA margin,
%
• The key driver of year-on-year revenue growth of 53.8% was a 32.2% increase in visits, including 28.0% attributable to the Group’s “new assets” as well as a 9.9% increase in the average ticket.
• OIBDA rose by 39.3% during the reporting period against a backdrop of dynamic revenue growth.
• OIBDA margin declined slightly compared to 1H12
• The group posted a net profit of US$0.4 million due to various measures to enhance operating efficiency
11.4% 10.3%
1H13IH12+39.3%
1H13
15.2
1H12
10.9
1H131H12
95.7
147.2
53.8%
Main financial results
5
0.4
-3.4
Operating expenses
An increase in operating expenses occurred against a background of a significant expansion in the Group’s business, while revenue growth outpaced the increase in SG&A expenses
SG&A, US$ mln
Cost of sales, US$ mln
• The share SG&A in total revenues fell by 1.1 pps to 14.0% compared to 1H12.
• The 43.3% growth of sales, general and administrative expenses was attributable, primarily, to an increase in consulting costs and these were linked primarily to the preparation of the Group’s new development strategy as it consolidates new assets.
• Growth in cost of sales was due the volume of services provided through the merged assets, as the majority of revenues at these facilities comes from fixed-price contracts.
+43.3%
1H131H12
+63.4%
1H131H12
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The Group’s net debt was reduced by 17.9% due an increase in cash flow
Net debt, US$ mln
Total debt, US$ mln
• The net debt of the Group, calculated as the sum of short-term and long-term obligations net of cash and cash equivalents, stood at US$42.7, a reduction of 17.9% since the beginning of 2013.
• The small increase in the total debt of the Group is attributable to the receipt and payment of individual tranches of loans, as well as changes in the US dollar exchange rate.
• All of the Group’s debt is denominated in rubles.
52.0 42.7
-17.9%
1H132012
+7.1%
1H131H12
Debt
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73.4 78.6
Healthcare/Moscow and Moscow regionRevenues, US$
Visits, ‘000s
60
50
40
30
20
10
0
+62.9%
1H131H12
33.2%
1H13
2 025.9
1H12
1 520.9
Space and revenues per m2
2 500
1 500
0
100 000
200 000
1 000
2 000150 000
50050 000
0
64.6%
1H13
159,813
795.9
1H12
34,708
2,250.2
Revenue/m2 Space m2
Main events
• The reduction in revenues/m2 was attributable to the merger of MCMGM assets and inclusion in this ratio of the space of the in-patient and rehabilitation centers, for which this ratio is significantly lower.
• A range of new medical programs were launched: additions were made to “Designer Health”, the “Diabetes” program was launched along with two new programs based at the children’s clinic at Pirogovskaya.
The merger of MCMGM assets has significant potential for the further development of the in-patient care segment 8
Appendix
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Medsi has leading positions on the private healthcare market in Moscow and Russia
About MedsiMedsi is a leading national provider of medical and healthcare services in Moscow and other regions
•30 clinics, 3 hospitals, 79 medical posts, 3
rehabilitation centers and 3 fitness clubs
•Presence in 18 Russian cities
•Developed range of formats
•Developed range of formats
•High-quality medical service
•Over 173,000 m2 of medical space
•Number one on the Russian market•4.9% of the private healthcare market in Moscow*•1.6% of the private healthcare market in
Russia**
* Medsi’s calculation based on figures from BusinesStat for 2012, excluding the ‘gray’ segment** Medsi’s calculation based on figures from BusinesStat for 2012, share of clinics excluding mandatory medical insurance
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Group’s assets today
Today Medsi has a unique group of assets and is correctly structured for future growth
3 Hospitals
• Hospital no. 1: Pyatnitskoye Shosse• Hospital no. 2: Botkinsky Proyezd• Hospital no. 3: Minchursky Prospekt
7Clinical and diagnostic centers
• Center at Belorusskaya• Medsi International Clinic• Clinic no. 1: Blagoveshchensky Pereulok• Clinic no. 2: Ulitsa Solyanka• Clinic no. 3: Khoroshevsky Proyezd• Clinic no. 4: Ulitsa Bolshaya Cheryomushkinskaya Children’s clinics:• Medsi II: Ulitsa Bolshaya Pirogovskaya• Clinic no. 5: Blagoveshchensky Pereulok
23First-aid clinics
• 12 clinics in Moscow• 11 clinics in the regions• 79 medical posts throughout Russia
3 Rehabilitation centers
• Serebryany Bor• Otradnoye (Moscow Region)• Mellas (Crimea, Ukraine)
3 Fitness centres
• Olympic Star• Kaskad (Cascade)• Serebryany Bor
Other assets
• Concierge service/help at home• Own first aid• Laboratories
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MEDSI before 2012МEDSI after the deal with MCMGMTarget areas for development
Preventative treatment and
early diagnosis
Wellness and healthcare services
First aid and specialist care
Emergency assistance
Neurological careFirst aid In-patient
treatment
Specialist medical care at homeRehabilitation
Gerontology
Care for the terminally ill – hospice
Medsi is a full-cycle provider of medical services
Full-cycle provision of medical services
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2007 2008 2009 2010 2011 2012E 2013E 2014E 215E 2016E 2017E 2018E0
300
600
900
1200
1500
445573
471546
654 682748
819896
9931,098
1,202
GDP per capita, RUB ‘000
Stable GDP growth… … together with rising real income…
2007 2008 2009 2010 2011 2012E 213E 2014E 2015E 2016E 2017E 2018E0
100
200
300
400
500
127 146 164 184 205 221243
268295
323354
388
Real income per capita, RUB ‘000
… and an ageing population in Russia…
Source: BusinesStat, EIU, Rosgosstrakh, World Bank
2007 2008 2009 2010 2011 2012E 2013E 2014E 2015E 2016E
16% 16% 16% 16% 16% 17% 17% 17% 17% 17%
63% 63% 63% 62% 62% 61% 60% 60% 59% 58%
21% 21% 21% 22% 22% 22% 23% 23% 24% 24%
< 16 years 16-60 years >60 years
… is driving demand for private healthcare
Rising wealth, an ageing population and a lack of high-quality services are driving the development of private healthcare
Drivers of the private healthcare market in Russia
+8.8%
+9.9%
+11.8%
+9.8%
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Most of the demand for private healthcare services will come from insurance companies
Private healthcare market in RussiaForecast for the private healthcare market in Russia, RUB*
* Figures from BusinesStat for 2012 • In 2012, BusinesStat estimates that the market grew by 11.5%
• Over the next five years, average growth is forecast at over 10% annually, while the share of the ‘gray’ sector is expected to shrink
• In the next few years, the amount of ‘gray’ payments in clinics is expected to fall: BusinesStat estimates that their share will be 6.6% of the total by 2017 (including mandatory medical insurance). In 2012, the share was 9.2%.
Breakdown of the market by service in 2012**
** Figures from BusinesStat for 2012
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Thank you!
For more information, please contact:Medsi Group of CompaniesSvetlana Ponkratova Tel: +7 (495) 737 0722, ext. [email protected]
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