Year End Results PresentationFor 12 months ended 30 September 2013
www.lifehealthcare.co.za
Agenda
Group Group FinancialFinancial Future Future ppReviewReview ReviewReview GuidanceGuidance
Michael Flemming Pieter van der Westhuizen Michael FlemmingMichael FlemmingCEO
Pieter van der WesthuizenCFO
Michael FlemmingCEO
2
Highlights
• SA growth:PPD l h 2 7%– PPD volume growth 2.7%
– Additional beds 95– Good pipeline of beds for next 3 years
Growth
• Occupancy 71.7%• Normalised Ebitda margin 28.1%• Group DSO 31 days
Efficiency
• Continued improvement in clinical outcomes • Focus on training of specialised nurses and doctors • Reduction in carbon footprint
Sustainability
3
SA : GrowthPPDs
2 100
2 200PPDs
3 8% PPD
1 900
2 000
2 1002.7%
6.1%
5 4%
3.8% PPD growth in H2
1 600
1 700
1 800
4.0%
5.4%
2.5%
1 400
1 500
1 600
2008 2009 2010 2011 2012 2013
Bed growth 101 148 475 234 292 95growth
4
SA : GrowthBeds
CategoryNew beds
2013WIP beds
Approvedbeds *
Applicationspending
Capacity expansion at existing facilities 75 231 374 364
New facilities - 94 150 338
*Approved : received Health department licence approval and are in the process of obtaining Municipal approvals before commencing building
Acute HospitalsB d b d th t t k d t f ith t d d Broad based growth to take advantage of areas with strong demand 94 bed Life Hilton Private hospital under construction
5
SA : GrowthBeds
CategoryNew beds
2013WIP beds
Approvedbeds *
Applicationspending
Capacity expansion at existing facilities 75 231 374 364
New facilities - 94 150 338
NLB - Mental Health / 20 35 432Acute Rehabilitation 20 - 35 432
*Approved : received Health department licence approval and are in the process of obtaining Municipal approvals b f i b ildibefore commencing building
New Lines of Business 20 Mental health beds added in 2013 Start construction of 35 bed mental health unit at Life Vincent Pallotti in early 2014 Current total of 703 NLB beds Aim to reach 1,000 NLB beds in 3 years
6
SA : Growth Beds
CategoryNew beds
2013WIP beds
Approvedbeds *
Applicationspending
Capacity expansion at existing facilities 75 231 374 364
New facilities - 94 150 338
Mental Health / 20 35 432Acute Rehabilitation 20 - 35 432
Total 95 325 559 1 134
Strong overall pipeline of beds Good combination of brownfield, greenfield and mental health / acute rehabilitation Cover 8 regions within SA
7
SA : GrowthOther
Renal Dialysis chronic stations added : 42 stationschronic stations added : 42 stations
total number of stations : 122 stations
Complete roll-out in 2014: to 180 stations
Acute renal dialysis coverage expanding
NLB (mental health, acute rehabilitation, renal dialysis) revenue growth
361
444
350400450500
CAGR : 37.2%R’000m
172216
150200250300350
050
100150
2010 2011 2012 2013
NLB Revenue
8
SA : GrowthOther
Oncology A new Oncology unit at Life Vincent Pallottigy
providing both chemotherapy & radiosurgery
Radiosurgery will be supplied through thenew R46m Novalis Radiosurgery machine g ywhich provides non-invasive shaped beam radiosurgery
Only machine in Africa
The chemotherapy unit opened in 2013 andthe radiosurgery unit will open in Q1 2014
Affordable Maternity ProductAffordable Maternity Product Started piloting the affordable
maternity product
O 50 ll d Over 50 women enrolled
Considering extending the pilot to2 additional facilities
9
SA : GrowthHealthcare Services
Healthcare Services Life Esidimeni
stable performance Renewal of Conradie (WC) : 220 beds and Shiluvana Care Centre (Limpopo) : 160 beds
(potential to add 40 paediatric beds)
Life Occupational Health Continued strong growth in a difficult environment
831.0
636.0674.0
748.0
600
800
CAGR : 9,3%R’000m
200
400
0
200
2010 2011 2012 2013
HCS Revenue
10
2010 2011 2012 2013
India : Max Healthcare Bed Growth
BedOperational
bedsOperational
bedsUnit
Bed Capacity
bedsSept 2013
bedsSept 2012
Existing Hospitals 1 080 1 040 1 014
New Hospitals:
Shalimar Bagh 288 150 78
Mohali 204 141 95
Bathinda 205 56 83
Dehradun 201 89 48
Total new 898 436 304
C bi d t t l 1 943 1 476 1 318Combined total 1 943 1 476 1,318
467 beds still to become operational
11
p
India : Max Healthcare Occupancy
BedOperational
bedsOperational
beds OccupancyOccupancy
atUnit
Bed Capacity
bedsSept 2013
bedsSept 2012
OccupancyQ2 2014
at30 Sept 2013
Existing Hospitals 1 080 1 040 1 014 79.1% 85%
New Hospitals:
Shalimar Bagh 288 150 78 84.2% 100%
Mohali 204 141 95 72.8% 80%
Bathinda 205 56 83 56.6% 55%
Dehradun 201 89 48 73.8% 73%
Total new 898 436 304 74.7% 82%
C bi d t t l 1 943 1 476 1 318 77 8% 84%Combined total 1 943 1 476 1,318 77.8% 84%
12
SA : EfficiencyEbitda Margin
Case mix change: positive margin impact
Strong management of consumables procurement g g p
Continued management of overheads and administrative costs
28
30%
28.1%
26
28
24.7%
26.0%26.6%
22
24
202010 2011 2012 2013
13
SA : EfficiencyCase Mix Impact
6%Asthma
Incidence of Chronic Diseases of Lifestyle Amongst LHC Admissions
4%
5%
Asthma
Coronary Artery Disease
Diabetes Mellitus Type 2
Hyperlipidaemia
3%
4%Diabetes Mellitus Type 1
Cardiac Failure
Epilepsy
H poth roidism
1%
2%Hypothyroidism
Dysrhytmias
Chronic Obstructive Pulmonary Disease
Chronic Renal Disease
0%
1%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Rheumatoid Arthritis
HIV
The overall incidence of chronic diseases of lifestyle (CDL) amongst patients admitted to LHC facilities has doubled from 16% in 2003 to 33% in 2012
14
SA : EfficiencyEffective use of assets
71.0 71.2 71.772% H2 occupancy:74.3%
69.5
68
7074.3%
64
66
2010 2011 2012 2013
924
2013: Bed Occupancy Split
1321
2012: Bed Occupancy Split
27
40
2413
24
42
21 < 60%60 - 69%70 - 79%80%+ 4042 80%
Beds above 70% occupancy: 63% Beds above 70% occupancy: 64%
15
EfficiencyAdministrative - Working capital management
5554 54
55
60
Consistent good performance in working capital management
4951
49
45
50
DSO Total DSO:
31 days (2012: 30)
3436
40
Hospital DSO:29 days (2012: 29 days)
Hospital DSO excluding COID:
25.824 6 25.5
3433
3130
31
30
35 25 days (2012: 25 days)
Stock cover Rigorous processes in place to ensure
23.7 24.3 24.6 24.3
20
25
2008 2009 2010 2011 2012 2013
Rigorous processes in place to ensure continuity of supply
008 009 0 0 0 0 0 3
Stock cover DSO Days payables outstanding
16
SA : EfficiencyPrograms
Cost of sales management Cost of Sales inflation: 2.2%
17.31520
Rand depreciation
%
Cost of Sales inflation: 2.2% Strong procurement performance
Product utilisation
5.92.2
05
10
Rand CPI LHC COS
Rand depreciation
CPI
LHC COS Inflation
Pathology - Blood Gas tests in ICU Completing roll out of the in-house delivery of blood gas pathology tests in ICUs
Fi i l b fit h d ith di l h
depreciation Inflation
Financial benefits shared with medical schemes
Positive contribution to Ebitda in 2014
Central LaundryCentral Laundry Opened in-house laundry for the Inland region, covering 28 hospitals (4 100 beds)
Centralised credit services Centralisation of Inland Credit services bringing operational efficiencies and
cost savings
17
SA : EfficiencyPrograms
Systems driven efficiency through Impilo
Focus on driving standardisation reduction in administrative costs & economiesFocus on driving standardisation, reduction in administrative costs & economiesof scale
Completion and rollout of the e-dispensing module using bar coding technology
e-theatre billing module will be ready for piloting at the end of the 2013. Using multi-touch technology the hospitals will benefit from a paperless real time billing process
Environment
Implementing Environmental Management system – objective of obtaining an ISO 14001 environmental certification
Energy efficiency projects Energy efficiency projects
A real-time, online electrical metering system has been installed
Converting existing geysers and gas-fired boilers to more efficient heat pump hot water ti t A d ti f 3 illi k f CO i i t d tgeneration systems. A reduction of over 3 million kg of CO2 emissions to date
Life Hilton Private Hospital will be the first greenfield hospital within Life Healthcare to be designed according to the new specifications - anticipate the hospital being 20% more efficient
18
SA : SustainabilityQuality - Measuring clinical outcomes
MeasureOutcome Sept 2013
OutcomeSept 2012 Standard
Patient incident rate 3.24 3.80 Per 1,000 PPDs
VAP (Ventilator Associated Pneumonias) 2.69 4.02 Per 1,000 VAP days
SSI(S i l Sit I f ti ) 0 74 0 97 P 1 000 th t(Surgical Site Infections) 0.74 0.97 Per 1,000 theatre cases
CLABSI(Central Line Associated Blood Stream Infections) 0.83 1.11
Per 1,000 central line days) y
CAUTI(Catheter-related Urinary Tract Infections) 0.57 0.68 Per 1,000 catheter days
FIM/FAM Score 1.14 1.00 > 0.9
Continuous improvement in clinical quality indicators A reduction in the HAI (Hospital associated infection) rate: 0.52 (2012: 0.65)
19
SA : SustainabilityRegulatory environment
Competition Commission (CC) market inquiry
To date the final terms of reference have not been released by the CC ExpectTo date the final terms of reference have not been released by the CC. Expect early December 2013
The Group believes that if the inquiry is to achieve it’s objectives it needs to: be an independent, factual and impartial inquiry which includes the participation of
all major stakeholders
cover the entire industry, including the public sector and not just review the hospital, co e t e e t e dust y, c ud g t e pub c secto a d ot just e e t e osp ta ,doctor and insurance sectors
have detailed analysis of the factors that drive healthcare expenditure
i th t t l i ffi i i f th i d t d k d ti t review the structural inefficiencies of the industry and make recommendations to remove them
20
SA : SustainabilitySkills development
Category DescriptionSpecialist training Year 2 of R78m 6 year funding program
Focus on Cardiology, Nephrology, Maternity, Paediatrics, Oncology
Nurse training Enrolled 920 students enrolled Life College of Learning now 15 years old – graduated over 10 000 nurses Set-up nursing academy in Delhi in conjunction with MHC. Focus onSet up nursing academy in Delhi in conjunction with MHC. Focus on
specialised nursing – critical care and theatre nurses.
Pharmacist training Life Healthcare launched the Clinical Pharmacy Practice certificate course in collaboration with NMMU
87 pharmacist assistants in training
Management training 107 participants graduated from The Life School of Management, an accredited UK based Institute of Leadership and Management (ILM) foraccredited UK-based Institute of Leadership and Management (ILM) for Front Line Management
21
FinancialFinancial ReviewPi t d W th iPieter van der WesthuizenCFO
www.lifehealthcare.co.za22
Highlights
Revenue Growth
Excellent normalised Strong cash
generationIncreased dividendGrowth EPS growth generation dividend
+17 4%+17 4%+17 4%+8 3%+8 3%+8 3% +12 2%+12 2%+12 2% ToToTo
Revenue +8 3% to R11 843m
+17.4%+17.4%+17.4%+8.3%+8.3%+8.3% +12.2%+12.2%+12.2% To126 cps
To126 cps
To126 cps
Revenue +8.3% to R11 843mOperating profit +16.0% to R2 948mProfit before tax +17.5% to R2 833m
EPS + 17.9% to 169.7 centsHEPS +20.6% to 169.7 centsNormalised EPS +17.4% to 162.1 centsDividend +20.0% to 126.0 cps
Normalised earnings exclude non-trading related items such as profit/loss on disposal of businesses and PPE, impairment of intangibles and ti t f d l /d fi it
23
retirement fund surpluses/deficits.
Financial results
Sept 2013
Sept2012 %
R 11 843 10 937 8 3%Revenue 11 843 10 937 8.3%
Normalised Ebitda 3 332 2 907 14.6%
Normalised Ebitda margin 28.1% 26.6%g
Revenue growth in hospitals 2 7% increase in PPDs (3 8% increase in H2)2.7% increase in PPDs (3.8% increase in H2) 5.3% increase in revenue/ppd Continued strong growth of medical cases - dilutes revenue/ppd
N li d Ebitd i Normalised Ebitda margin Positive impact on Ebitda margin due to growth in medical cases Excellent management of procurement and overheads Continue to leverage efficiencies across the group
24
Financial resultsMedical / Surgical split
Acute: Medical / Surgical split
525456
464850
404244
2008 2009 2010 2011 2012 2013
Surgical Medical
S f Since 2011 experienced a faster growth in medical cases in the acute hospitals Combination of LHC patient mix & the disease burden
25
Financial resultsMedical / Surgical split
Acute: Medical / Surgical split Group: Medical / Surgical split
525456
525456
464850
464850
404244
404244
2008 2009 2010 2011 2012 2013
Surgical Medical
2008 2009 2010 2011 2012 2013
Surgical Medical
f The impact of Mental Health and Acute Rehabilitation only increases the numberof medical cases
26
Four year review
Revenue Normalised Ebitda
44412000
14000 Hospital HCS NLB2 907
3 332
3 200
3 600
CAGR : 15.3%CAGR : 10.5%R’000 mR’000 m
636674
748831
172216
361
8000
10000
12000
2 1732548
2 000
2 400
2 800
7978 8922 9828 10568
2000
4000
6000
400
800
1 200
1 600
C
02010 2011 2012 2013
0
400
2010 2011 2012 2013Hospital revenue includes other revenue
Consistent growth in revenue Improvement in efficiencies assisted growth in normalised Ebitda
27
Financial resultsRevenue breakdown
2010 2013
24.7%2.7%
1.3% 8.9%
28.1%
10 2%
3.2%
1.1% 8.4%
12.1%10.2%
16.7%
33 3%
15.7%
33.6% 33.3%
Normalised EBITDA Employee benefits expense
COS Surgical COS Ethicals
Occupational expenses Repairs and maintenance
Other
Financial results
Sept2013
Sept2012 %
REVENUE 11 843 10 937 8.3%
Normalised Ebitda 3 332 2 907 14.6%
Normalised Ebitda margin 28 1% 26 6%Normalised Ebitda margin 28.1% 26.6%
Operating profit 2 948 2 542 16.0%
Associates 65 85
Attributable earnings 1 761 1 496 17.7%
Associates include JMHJMH MHC included for 12 months compared to last year 8 months
Attributable earnings is defined as earnings attributable to ordinary shareholders
29
Attributable earnings is defined as earnings attributable to ordinary shareholders
Financial results
Sept2013
Sept2012 %
EPS 169.7 143.9 17.9%
Profit on disposal of business / gain on re-measuring of fair value 0.4
(0 4)(2.5)(0 7)
Profit on disposal of property, plant and equipment (0.4) (0.7)
HEPS 169.7 140.7 20.6%
Retirement funds (6 0) (2 6)Retirement funds (6.0) (2.6)
Gain on de-recognition of finance lease liability (1.6) -
Normalised EPS 162.1 138.1 17.4%
Normalised EPS – excl. impact of MHC 170.1 144.2 18.0%
2014: new accounting standards impact EPS and HEPS. The retirement fund surplus will not form part of the EPS & HEPS calc lation If applied to 2013 EPS & HEPS o ld bothnot form part of the EPS & HEPS calculation. If applied to 2013, EPS & HEPS would both be 163.7 cps respectively.
30
Financial results
Normalised EPS
138.1
162.1 160.0
180.0 CAGR: 20.5%
92 7
119.3
138.1
100 0
120.0
140.0
92.7
60.0
80.0
100.0
20.0
40.0
-2010 2011 2012 2013
31
Financial resultsSegmental review
Sept2013
Sept2012 %
REVENUE 11 843 10 937 8.3%Hospital division 11 010 10 185 8.1%Healthcare services 831 748 11.1%Healthcare services 831 748 11.1%Other 2 4
Hospital Division: Improved H2 for hospital division with revenue growing 9.5% HCS division: Good overall performance from HCS despite slightly softer H2
32
Financial resultSegmental review
Sept2013
Sept2012 %
REVENUE 11 843 10 937 8.3%Hospital division 11 010 10 185 8.1%Healthcare services 831 748 11.1%Healthcare services 831 748 11.1%Other 2 4
Operating profit before amortisation, profit on disposals and impairment of intangible assets 2 982 2 598 14.8%
Hospital division 2 694 2 242 20.2%Healthcare services 167 121 38.0%Other 121 235 (48.5)%
Hospital Division: Improved operating efficiencies resulted in 22 3% growth in Hospital Division: Improved operating efficiencies resulted in 22.3% growth inOperating profit in H2
HCS Division: Impairment charge in Life Esidimeni of R20m in 2012. Other: Streamlining of property structures and internal rentals
33
Other: Streamlining of property structures and internal rentals
India : Max Healthcare Revenue Growth
350 350
Rsin Cr
Rsin Cr
270290310330
270290310330
190210230250
190210230250
150170
Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14Total
150170
Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14
Existing New
Revenue (Rs.Crore) H1 14 H1 13 % Q2 14 Q2 13 %Revenue – Existing hospitals 528 484 9.1% 271 242 12.0%Revenue Existing hospitals 528 484 9.1% 271 242 12.0%
Revenue – New hospitals 139 52 167.3% 78 32 143.8%
Revenue Total 667 536 24.4% 349 274 27.4%
Financial year end: March
34
Financial year end: March
India : Max Healthcare Ebitda Growth
40 40
Rsin Cr
Rsin Cr
20
30
10
20
30
0
10
-20
-10
0
Ebitd (R C ) H1 14 H1 13 % Q2 14 Q2 13 %
-10Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14
Total
-30Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14
Existing New
Ebitda (Rs.Crore) H1 14 H1 13 % Q2 14 Q2 13 %Ebitda – Existing hospitals 58 48 17.2% 33 18 83.3%
Ebitda – New hospitals (9) (23) 156% (1) (13) 1200%
Ebitd T t l 47 25 88 0% 32 5 540%Ebitda - Total 47 25 88.0% 32 5 540%
Ebitda margin – Existing hospitals 11.0% 9.9% 12.2% 7.4%
Ebitda margin – Total hospitals 7.0% 4.7% 9.2% 1.8%
Financial year end: March
35
Financial year end: March
Cash generated vs normalised EBITDA
120%4 000
R 000m
103% 101% 105% 103%100%
120%
3 000
3 500
4 000
60%
80%
2 000
2 500
3 000
2 2332 562
3 0423 414
40%
60%
1 000
1 500
2 000
0%
20%
0
500
1 000
%2010 2011 2012 2013
Cash generated from operations Cash generated as % of normalised EBITDA
36
Capital Expenditure
13% 14%1 600
R 000m
13%
12%
14%
1 200
1 400
1 600
9%8%
7% 8%
10%
800
1 000
1 200
813 780
1 433
829 4%
6%
400
600
800
813 780
0%
2%
0
200
400
%2010 2011 2012 2013
Capex as a % of revenue
37
Financial resultsCapex
1000
R 000m
650600
800
1000 75 acute new beds 20 mental health new beds Land for 94 bed Life Hilton hospital Property for Life Peglerae extension
105 111
488650
200
400
600 Property for Life Peglerae extension Oncology equipment at Life Vincent Pallotti
Capex on maintenance & equipment
188 157
105 111
0
200
2012 2013 Repairs & maintenance but not included
under Capex
Capex Upgrades expansion Capex Maintenance Repairs & Maintenance
Excludes Capex spent on acquisitions 2012: R823m of purchase of 26% shareholding in MHC 2013: R68m used to maintain 26% shareholding in MHC
38
2013: R68m used to maintain 26% shareholding in MHC
Summarised statement of financial positionAssets
Sept2013
Sept2012 Movement
NON-CURRENT ASSETS 8 343 7 771 572PPE 4 518 4 010 508Intangibles 2 084 2 181 (97)g ( )Other 1 741 1 580 161
Current assets (excl cash) 1 327 1 239 88Current assets (excl. cash) 1 327 1 239 88Cash 300 246 54Total assets 9 970 9 256 714
Non-current assets: Other includes Max Healthcare with an additional R68m investment made to maintain current shareholding
Own 84% of registered beds
39
Summarised statement of financial positionEquity and liabilities
Sept2013
Sept 2012 Movement
TOTAL SHAREHOLDERS EQUITY 5 607 4 878 729Non-current liabilities 2 150 2 445 (295)Interest bearing borrowings 1 657 1 929 (272)g g ( )Other non-current liabilities 493 516 (23)Current liabilities 2 213 1 933 280Total equity and liabilities 9 970 9 256 714Total equity and liabilities 9 970 9 256 714
Net debt (as per covenants) 2 115 2 205 (90)N t d bt t li d Ebitd ( t 3 ) 0 63 0 73Net debt to normalised Ebitda (covenant 3 x) 0.63 0.73
Max Healthcare acquisition financed through R820 million in five year redeemable preference sharesp
Finance cost of R49m for preference shares Preference shares are included in interest bearing borrowings
40
Dividend
Distributions Cents/share Rand% of Normalised
EBITDA Cover*
Interim 2012 45 R469 million 34.2% 1.47
Final 2012 60 R625 million 40.7% 1.34
Total 2012 105 R1 094 million 37.6% 1.39
Interim 2013 54 R563 million 36.4% 1.39
Final 2013 72 R750 million 42.1% 1.32
Total 2013 126 R1 313 million 39.4% 1.35
20% increase in DPS
41
* Cover calculated on normalised EPS excluding amortisation
Four year reviewDividends
39 445.02.00 162 1180
Cents%
34.737.6 39.4
30 0
35.0
40.0
1.401.601.80
119.3
138.1
162.1
120
140
160
1.92
1 50 1 39
24.9
20.0
25.0
30.0
0.801.001.20 92.7
85
105
126
80
100
120
1.50 1.39 1.35
5.0
10.0
15.0
0.200.400.60
52
20
40
60
0.00.002010 2011 2012 2013
Cover % Ebitda
02010 2011 2012 2013
Normalised EPS DPS
Dividend cover: 1.35 times % of Ebitda: 39.4%
Normalised EPS CAGR: 20.5% Normalised DPS CAGR: 34.3%
N li d EPS l di ti ti
42
Normalised EPS excluding amortisation
Future GuidanceMi h l Fl iMichael FlemmingCEO
www.lifehealthcare.co.za43
Future Guidance
CEO Change Time is rightTime is right Leave behind a company:
1. Excellent Management teamE i Experience Depth
44
Future Guidance
Executive16 years service
CEO
Operational Management(3)
Enabling Management(4)
Support Management(4)
Finance and AdminProcurement
LegalHR
Company Secretarial
Clinical Directorate Nursing and Pharmacy
Strategy, Business Development, Funder
Management &
2 Hospital Execs 1 Healthcare Services Exec
Company SecretarialInformation Management
Management &Health Policy
Hospital ExecInland
Hospital ExecCoast HCS Exec
Rms17 years service
RM WC RM KZNRM PE RM EL RM N RM CRM E RM W
750 beds 555 beds 1 403 beds751 beds 1 482 beds 1 316 beds 784 beds 1 238 beds
Life Occupational
Health
Life Esidimeni
45
Future Guidance
CEO Change Time is rightTime is right Leave behind a company:
2. Primed for growthh it l b d hospital beds business opportunities
» Renal dialysis» Affordable maternity
46
Geographic spreadRegistered beds 2013
MPBeds 2013: 419
Botswana
TotalBeds 2013: 8 279
NWB d 2013 354 GTN
Beds 2013: 132
Beds 2013: 354 GTNBeds 2013:3 617
KZNBeds 2013:1 403FS
Beds 2013: 298
WCB d 2013 750 EC
Beds 2013: 298
Beds 2013: 750 ECBeds 2013:1 306
Geographic spreadWIP beds 2013
MPBeds 2013: 419 WIP: 20Botswana
TotalBeds 2013: 8 279WIP: 325T t l 8 604
NWB d 2013 354 GTN
Beds 2013: 132 Total: 8 604
Beds 2013: 354 GTNBeds 2013:3 617WIP: 106
KZNBeds 2013:1 403WIP: 132
FSBeds 2013: 298
WCB d 2013 750 EC
WIP: 132Beds 2013: 298WIP: 16
Beds 2013: 750WIP: 12
ECBeds 2013:1 306WIP: 39
Geographic spreadApproved beds
MPBeds 2013: 419 WIP: 20Botswana
TotalBeds 2013: 8 279WIP: 325A d 559
NWB d 2013 354
Approved: 95
GTN
Beds 2013: 132 Approved: 559Total: 9 163
Beds 2013: 354Approved: 59
GTNBeds 2013: 3 617WIP: 106Approved: 23
KZNBeds 2013:1 403WIP: 132
FSBeds 2013: 298
WCB d 2013 750 EC
WIP: 132Approved: 107
Beds 2013: 298WIP: 16
Beds 2013: 750WIP: 12Approved: 235
ECBeds 2013:1 306WIP: 39Approved: 40
Geographic spreadLicence Pending beds – 50%
MPBeds 2013: 419 WIP: 20Botswana
TotalBeds 2013: 8 279WIP: 325A d 559
NWB d 2013 354
Approved: 95Pending: 75Total: 609
GTN
Beds 2013: 132 Approved: 559Pending: 567Total: 9 730
Beds 2013: 354Approved: 59Pending: 23Total: 436
GTNBeds 2013: 3 617WIP: 106Approved: 23Pending: 209
KZNBeds 2013:1 403WIP: 132
FSBeds 2013: 298
Total: 3 935 NCPending: 75
WCB d 2013 750 EC
WIP: 132Approved: 107Pending: 37Total 1 679
Beds 2013: 298WIP: 16Total: 314
Beds 2013: 750WIP: 12Approved: 235Pending: 10Total: 1 004
ECBeds 2013:1 306WIP: 39Approved: 40Pending: 138T t l 1 524Total: 1 524
Future Guidance
CEO Change Time is rightTime is right Leave behind a company:
2. Primed for growthI t ti l International
» India• Continued improvement in revenue – additional beds become
operational• Continued improvement in Ebitda due to cost saving initiatives • Equality shareholding with MHCq y g• Other growth opportunities
» Africa• Ghana• Ghana
» Eastern Europe• Poland
51
Future Guidance
CEO Change Time is rightTime is right Leave behind a company
3. Culture of continuous efficiency improvementC t t f Cost management focus Strong Procurement system ARM pricing and preferred network model Detailed analysis and reporting Impilo system – no need for an external IT platform Always reviewing efficiency opportunitiesy g y pp
» Blood gas
52
Future Guidance
CEO Change Time is rightTime is right Leave behind a company:
4. Sustainability focusW ld l lit t t World class quality management system
» Measurement, reporting & benchmarking of clinical outcomes» Continually reviewing outcome measures
D t h h ldi d l Doctor shareholding model» Doctors hold a non-controlling interest in 54% of registered beds
Emphasis on clinical training» R78m 6 year specialist training investment» 920 nurses in training» 87 pharmacist assistants in training
53
Future Guidance
CEO Change: Time is rightTime is right Leave behind a company:
5. History of performance
3000
3500Normalised Ebitda
12 000
14 000 Revenue Growth
CAGR: CAGR:
1500
2000
2500
6 000
8 000
10 000 12.9% 19.4%
0
500
1000
-
2 000
4 000
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Normalised Ebitda
-
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Revenue
54
Interim Results PresentationFor 12 months ended 30 September 2013
www.lifehealthcare.co.za
Shareholding
60
%
50
60
40
20
30
10
0SA N America UK Europe Rest
Sep-13 Mar-13Sep 13 Mar 13
56
Glossary of terms
AMI Acute myocardial infarction HEPS Headline earnings per share
AMS Antimicrobial stewardship ICU Intensive care unit
Approved Received Health department licence approval. Have not commenced building
MHQ 14 Mental Healthcare questionnaire 14
ARM Alternative reimbursement model NHI National Health Insurance
CAUTI Catheter-related urinary tract infections Normalised Ebitda Earnings before interest, depreciation and amortisation (defined as operating profit plus depreciation, amortisation of intangibles, impairment of goodwill as well as excluding profit/loss on disposal of business/property and surplus/deficits on retirement benefits)
CC Competition Commission NPS Net promoter score
CLABSI Central line associated bloodstream infections LOH Life Occupational Healthcare
COE Centre of excellence PPD Paid patient day
COID Compensation for occupational injuries and diseases
PROMS Patient reported outcomes measures
DSO Days sales outstanding SSI Surgical site infections
EBITDA Earnings before interest, depreciation and amortisation
STC Secondary tax on companies
FIM/FAM Functional Independence measureFunctional assessment measure
VAP Ventilator associated pneumonia
HAI Health associated infections WIP Work in progress
57
p g
Life Healthcare History
Phase Time Period Event
C ti 1983 Af i d A d 4 h it lCreation 1983 • Afrox acquired Ammed group – 4 hospitals
Phase 1 growth 1985 - 1998 • Acquisition of 14 additional individual hospitals• Acquisition of PE Hospital group (5 hospitals), including 1st
mental health nitmental health unit• Built The Glynnwood and Empangeni hospitals• Purchase of Gaborone Hospital• Started Occupational Health business
Opened 1st acute rehabilitation unit• Opened 1st acute rehabilitation unit
Listing 1999 • Merged with Presmed in a reverse listing and changed name to Afrox Healthcare LtdStarted management of Lifecare (now Life Esidimeni)• Started management of Lifecare (now Life Esidimeni)
Phase 2 growth 2000 - 2004 • Acquired 55% of Lifecare• Acquisition of 3 additional independent hospitals• Acquisition of Amahosp group (4 hospitals)Acquisition of Amahosp group (4 hospitals) • Launched renal dialysis• Built Roseacres and Humansdorp hospitals• Launched UK project – PHG JV
58
Life Healthcare History
Phase Time Period Event
D li ti d 2005 2009 D li t d Af H lthDe-listing and phase 3 growth
2005 - 2009 • Delisted Afrox Healthcare• Established Life Healthcare• Acquired remaining stake in Life Esidimeni• Sold 50% share in PHG JV
B ilt Lif F• Built Life Fourways• Built Life Cosmos
f GRe-listing and phase 4 growth
2010 - • Re-listed as Life Healthcare Group Holdings Ltd• Built Life Orthopaedic hospital• Built Life Beacon Bay• Acquired Life Bay View Private hospital
O d Lif Gl i Lif St J h d Lif P t i• Opened Life Glynnview, Life St Josephs and Life Poortviewmental health units
• Opened Life Vincent Pallotti acute rehabilitation• Built Life Piet Retief hospital
A i d 26% h i M H lth I tit t (MHC)• Acquired a 26% share in Max Healthcare Institute (MHC)• Added over 1,000 beds between 2010 and 2012
59
Private healthcare insurance Industry Growth in members
Medical scheme lives000
8 500
9 000
000
7 000
7 500
8 000
6 000
6 500
2004 2005 2006 2007 2008 2009 2010 2011 2012
Comment• Strong growth in covered lives since 2004
Source: Council of Medical Schemes
St o g g o t co e ed es s ce 00• Benefitting from growth in middle class• Big impact from GEMs and low income schemes (scheme options) such as Keycare
and Boncap
60
Source: Council of Medical Schemes
Growth in Middle Class
Middle class lives000
7 5008 0008 5009 000
000
5 5006 0006 5007 0007 500
4 0004 5005 0005 500
2004 2008 2012
Comment• Middle class defined as an adult living in a household with income between R16,000
Source: UCT Unilever Institute of Strategic Marketing
dd e c ass de ed as a adu t g a ouse o d t co e bet ee 6,000and R50,000 per month
• 54% growth since 2004• Driven by strong growth in black middle class (142% increase)
61
Source: UCT Unilever Institute of Strategic Marketing
Private healthcare insurance Industry Earnings breakdown of members
Individual taxpayers using medical expenses deduction in 2009
R0 and less, 2.1%
R1 to R2,500pm, 2.2%
R2,501 to R5,000pm, 5.9%R33,334 to R441,667pm,
R41,668 to R62,500pm, 3.5%
R62,501 and over, 2.4%
, , p ,
R5,001 to R7,500pm, 11.2%
R25,001 to R33,333pm, 7.1%
33,33 to ,66 p ,3.6%
R7,501 to R10,000pm, 14.2%
R16,668 to R25,000pm, 15.3%
R10,001 to R12,500pm, 15.1%R12,50` to R16,667pm,
17.3%
Source: IMSA Policy brief 21
Comment• Little over half of all members using tax deduction earn under R12 500 per month
62
Little over half of all members using tax deduction earn under R12,500 per month
Burden of DiseaseWorldwide
The 3 leading causes of Dalys (Disability Adjusted Life Year) in 2030 are projected to be: Unipolar depressive disorders Ischaemic heart disease Road traffic accidents
63
Global Burden of Disease Report - WHO
Burden of Disease South Africa
Germany Nearly 40% share of HIV/AIDS in total
Diseases as % of total burden
Brazil
Ghana
Indonesia
USA
UK
Germany Nearly 40% share of HIV/AIDS in total disease burden (very high even for developing countries) Tuberculosis, influenza and pneumonia as
major causes of deathHigh infection rate among the black
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
South Africa
HIV/Aids Other Communicable Non-communicable Injuries
g gpopulationHigh incidence of non communicable
disease such as heart disease, cancer and diabetesSource: Econex calculations from WHO 2009 data
40 000
50 000
0 of
the
on
Very high infection rate and disease burden, even compared with developing countries
Burden of disease vs. other countriesDeveloping markets Developed markets
0
10 000
20 000
30 000
S G C S C G
DALY
's/1
00,0
00po
pula
tio
countries Burden of HIV/AIDS expected to
continue to grow despite strong government funding for treatment & prevention programmes SA has substantially higher numbers ofSA Ghana Indonesia Thailand Brazil Colombia Tunisia USA UK Canada Germany SA has substantially higher numbers of
sick people who are also sicker than those in other countries
Source: Econex calculations from WHO 2009 data
On average South Africa’s disease burden is 2x larger than in developing countries and 4x larger than in developed countries
64
than in developed countries
Burden of Disease Growth in Chronic, Cancer, HIV/AIDS
The burden of CDL Chronic Diseases, Cancer and HIV/AIDS in South Africa,1985 to 2025
65
Source: IMSA
South Africa’s populationAgeing
Strong increase in 50-and-above-year-old population. Expected to reach 19.1% (10.4 m) of total population in 2030 (from 13.9% in 2005)
Ageing not only results in more hospital visits but the average income per visit for patients over 50 is 67% higher than the g g y p g p p gaverage for patients under 50
Ageing patterns and larger absolute population size are important demand drivers for healthcare services
South African population by ageSouth African population by age
74+70–7463–7360–6453–63
10.4 m6.7 m53 6350–5443–5340–4433–4330–3425–3320 24
7.0 5.0 3.0 1.0 1.0 3.0 5.0 7.0
20–2415–2310–145–13
0–4
2005A 2030E
Source: UN Population Division.TOTAL: 48.1 m 54.7 m
Inexorable demographic trends: Ageing population and growing share of pensionable citizens are helping drive demand for hospital services
66
helping drive demand for hospital services