Investor Presentation First quarter of 2018 results Investing in the growth and quality of healthcare in Georgia May 2018 ghg.com.ge
Contents GHG | Overview and strategy GHG | Results discussion – 1Q18 Macroeconomic and Industry Overview Annexes 2
A unique investment story supported by compelling theme GHG ’ s (1) market leading position, a unique business model with significant growth potential and highly experienced management team make it a credible investment opportunity Market leader Long-term high-growth opportunities 1 3 ✓ Low base: only US$325 healthcare spending per capita (6) , only 3.9 outpatient encounters per ✓ The largest healthcare service provider in Georgia: 26.4%market share by number of capita annually (7) , only US$43,000 revenue per referral hospital bed for GHG (8) beds (3,320) 2 ✓ Supported by attractive macro: (9) Georgia – one of the fastest growing countries in Eastern ✓ The largest pharmaceuticals retailer and wholesaler in Georgia : 30% market share by Europe, open and easy emerging market to do business (10) , with real GDP growth averaged sales (3) , over 2 million client interactions per month, with 0.5 million loyalty card members 4.5% annually in 2007-17. Only 8.7% of GDP is spent on healthcare and spending growing at ✓ The 2 nd largest medical insurer in Georgia: 27.9% market share (4) , c.159,000 individuals 11.5% CAGR 2000-2014 (6) ; government spending more than doubled between 2011-17 (11) insured as at March 2018 ✓ Implying long-term, high-growth expansion that is driven by: ✓ The widest population coverage : coverage of over 3/4 of Georgia’s 3.7 million – Universal Healthcare Program (UHC) population (5) with 37 high quality hospitals, 17 district polyclinics, 24 express outpatient – Pick-up in polyclinics (outpatient market) clinics, and 256 pharmacies – Close service gaps – Potential to develop medical tourism ✓ Institutionalising the industry : strong corporate governance; standardised processes; improving safety and quality by implementing the Joint Commission International (“JCI”) benchmarked standards; own personnel training center 2 4 Business model with cost and synergy advantages Strong management with proven track record ✓ The single largest integrated player in the Georgia healthcare ecosystem of GEL 3.5 ✓ Strong business management team – an increased market share by beds from under 1% billion aggregate value with a cost advantage due to its scale of operation : purchasing, in 2009 to 26.4% currently centralisation of administrative functions ✓ Robust corporate governance : exceptional in Georg ia’s healthcare sector, as it is the only – The next largest healthcare services competitor has only 5% market share by beds Premium Listed company in the Georgian corporate industry (LSE:GHG LN) (12) ; 57% – The largest purchaser of pharmaceutical products in Georgia shareholder is BGEO Group PLC – listed on the Premium segment of the Main Market of the ✓ Better access to professional management and high calibre talent London Stock Exchange (LSE:BGEO), part of the FTSE 250 index. The rest of the shares are – One of the largest employers in the country: 15,491 full time employees, including 3,553 owned by institutional investors and management as part of Employee Stock Ownership Plan physicians, 3,305 nurses and 867 pharmacists (ESOP) ✓ Referral system & synergies with insurance and pharma business: – Presence of patient pathway, and referral synergies ✓ In-depth knowledge of the local market – Insurance activities provide steady revenue stream for our polyclinics and bolster hospital patient referrals – 0.5 million loyal customers in our pharma business with an upside to cross-sell Sources: (1) Georgia Healthcare Group established in Georgia and in UK (7) NCDC statistical yearbook 2016 (2) National Center for Decease Control (“NCDC”) . Data as of December 2016, updated by GHG to include the changes before 31 March 2018 (8) GHG internal reporting. Revenue per referral hospital bed excludes data of newly lunched Tbilisi Referral Hospital and Regional Hospital (3) Market size Frost and Sullivan analysis (9) Euromonitor, World Bank ’ s 2012 “ Ease of Doing Business Report ”, other public information. (4) Market share by gross revenue; Insurance StateSupervision Service Agency of Georgi a (“ISSSG”) as of 31 December 2017 (10) Ranked #9 in World Bank ’ s 2018 “ Ease of Doing Business Report ”, ahead of all its neighboring countries and several EU countries. (5) Geostat.ge, data as of 2015. The coverage refers to the geographic areas served by GHG facilities 3 (11) Ministry of Finance, Ministry of Economy (6) Frost and Sullivan analysis (12) GHG Group PLC successfully completed its IPO of ordinary shares on the Premium Segment of LSE on 12 November 2015
GHG – shareholder structure and share price Strong support from institutional investors Geographically well-diversified Top Investors (1) at IPO (1) institutional shareholder base (1) UK & Ireland – 37% Institutional USA & Canada – 32% Investors represent Luxemburg – 13% 40% of the shareholders BGEO 57.0% Other – 17% Investors 3% Wellington Management 7.4% 17% USA & Canada Institutional investors 32% 40% UK & Ireland BGEO 13% T – Rowe Price 6.2% 57% Luxemburg Managament and other Other 37% Average trading daily Stock Price Performance (2) Market Capitalisation (3) volume 2.79 GBP as at 600.0 4 May 2018 60.0 497.1 50.1 500.0 Stock 50.0 3.50 US$ thousands US$ millions trading 400.0 3.00 40.0 1.7 GBP - IPO Price performa 2.50 300.0 GBP 30.0 nce 2.00 200.0 1.50 20.0 1.00 100.0 10.0 9-Nov-2015 18-Nov-2015 27-Nov-2015 6-Dec-2015 15-Dec-2015 24-Dec-2015 2-Jan-2016 11-Jan-2016 20-Jan-2016 29-Jan-2016 7-Feb-2016 16-Feb-2016 25-Feb-2016 5-Mar-2016 14-Mar-2016 23-Mar-2016 1-Apr-2016 10-Apr-2016 19-Apr-2016 28-Apr-2016 7-May-2016 16-May-2016 25-May-2016 3-Jun-2016 12-Jun-2016 21-Jun-2016 30-Jun-2016 9-Jul-2016 18-Jul-2016 27-Jul-2016 5-Aug-2016 14-Aug-2016 23-Aug-2016 1-Sep-2016 10-Sep-2016 19-Sep-2016 28-Sep-2016 7-Oct-2016 16-Oct-2016 25-Oct-2016 3-Nov-2016 12-Nov-2016 21-Nov-2016 30-Nov-2016 9-Dec-2016 18-Dec-2016 27-Dec-2016 5-Jan-2017 14-Jan-2017 23-Jan-2017 1-Feb-2017 10-Feb-2017 19-Feb-2017 28-Feb-2017 9-Mar-2017 18-Mar-2017 27-Mar-2017 5-Apr-2017 14-Apr-2017 23-Apr-2017 2-May-2017 11-May-2017 20-May-2017 29-May-2017 7-Jun-2017 16-Jun-2017 25-Jun-2017 4-Jul-2017 13-Jul-2017 22-Jul-2017 31-Jul-2017 9-Aug-2017 18-Aug-2017 27-Aug-2017 5-Sep-2017 14-Sep-2017 23-Sep-2017 2-Oct-2017 11-Oct-2017 20-Oct-2017 29-Oct-2017 7-Nov-2017 16-Nov-2017 25-Nov-2017 4-Dec-2017 13-Dec-2017 22-Dec-2017 31-Dec-2017 9-Jan-2018 18-Jan-2018 27-Jan-2018 5-Feb-2018 14-Feb-2018 23-Feb-2018 4-Mar-2018 13-Mar-2018 22-Mar-2018 31-Mar-2018 9-Apr-2018 18-Apr-2018 27-Apr-2018 - - 1Q18 4-May-2018 Note: (1) As of 29 March 2018 (2) Share price change calculated from the closing pries of GHG LN, starting from trading date 9 November 2015 to the price of GHG LN as of 4 May 2018 4 (3) Source: Bloomberg; Market Capitalisation of GHG as of 4 May 2018, GBP/USD exchange rate 1.3531
Segment overview Georgia Healthcare Group Healthcare services Pharma Medical insurance Key Segments Hospitals Polyclinics Pharma Medical Insurance (outpatient clinics) Referral Hospitals Community Hospitals General and specialty hospitals Basic outpatient and inpatient Outpatient diagnostic and treatment Wholesaler and urban-retailer, with a Range of private insurance products offering outpatient and inpatient Key Services services in regional towns and services in Tbilisi and major regional services in Tbilisi and major regional countrywide distribution network purchased by individuals and municipalities cities cities employers Market Size GEL 0.7bln (2) GEL 1.5bln (2) addressable (1) GEL 0.2bln (3) GEL 1.2bln 2017 21% by revenue Market Share 2% by revenue 30% by revenue 28% by revenue 26.4% by beds (total 3,320 beds) Selected 15% 85% Operating 17 district polyclinics c.159,000 individuals insured 256 pharmacies in major cities 24 express outpatient clinic as at March, 2018 Data 16 hospitals 21 hospitals 1Q18 2,825 beds 495 beds 29% 2% 3% 6% GEL 207.7 mln (4) 60% Revenue Gross 2012-1Q18 2012-1Q18 2012-1Q18 GEL 13.3 mln CAGR 43% CAGR 14% CAGR 36% GEL 61.7mln GEL 6,2 mln GEL 5.0 mln GEL 126.9 mln Financials 57% 1% 1Q18 GEL 31.4 mln (4) 40% 2% EBITDA 2012-1Q18 2012-1Q18 CAGR 47% GEL 12.6 mln GEL 17.9 mln GEL 0.7mln CAGR 30% GEL 0.2 mln EBITDA Margin: 26.2% EBITDA Margin: 13.5% EBITDA Margin: 10.0% EBITDA Margin: 1.5% ` Sources: (3) ISSSG, as of 31 December 2017 (1) Frost & Sullivan analysis, 2017. Market adjusted by the company to exclude the revenue from specialty beds - addressable market 5 (4) Net of intercompany eliminations (2) Frost & Sullivan analysis 2017. Polyclinics market excludes revenue from dental and aesthetic services
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