Investor Presentation Third quarter and nine month of 2018 results Investing in the growth and quality of healthcare in Georgia November2018 ghg.com.ge
Contents GHG | Overview and strategy GHG | Results discussion – 3Q18 and 9M18 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: 24.9% market share by number of capita annually (7) , only US$41,000 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% market share (4) , c.158,000 individuals 11.5% CAGR 2000-2014 (6) ; government spending more than doubled between 2011-17 (11) insured as at 30 September 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, 16 district polyclinics, and 267 pharmacies – Pick-up in polyclinics (outpatient market) – Close service gaps ✓ Institutionalising the industry : strong corporate governance; standardised processes; – Potential to develop medical tourism improving safety and quality by progressive implementation of the Joint Commission International (“JCI”) benchmarked standards; own personnel training centre . 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 24.9% 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 healthcare industry (LSE:GHG LN) (12) ; 57% – The largest purchaser of pharmaceutical products in Georgia shareholder is Georgia Capital PLC (LSE: CGEO LN) - a UK listed investment company ✓ Better access to professional management and high calibre talent following completion of its demerger from BGEO Group PLC on 29 May 2018. The rest of – One of the largest employers in the country: 15,643 full time employees, including 3,592 the shares are owned by institutional investors and management as part of Employee Stock physicians, 3,313 nurses and 2,859 pharmacists Ownership Plan (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 2017, updated by GHG to include the changes before 30 September 2018 (8) GHG internal reporting. Revenue per referral hospital bed excludes data of newly lunched Tbilisi Referral Hospital and Regional Hospital (3) Market share by revenue for 2017 . 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 30 June 2018 (10) Ranked #6 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 - data for 2016 (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 – 36% Institutional USA & Canada – 33% Investors represent Luxemburg – 13% 40% of the shareholders Georgia Capital 57.0% Other – 18% Investors 3% Institutional investors 18% Wellington Management 6.37% 31% USA & Canada Georgia Capital 40% UK & Ireland 14% T – Rowe Price 6.19% 57% Managament and Luxemburg other Other 37% Average trading daily Market Capitalisation (3) Stock Price Performance (2) volume 2.4 GBP as at 150.0 500.0 3.50 7 November 414.0 Stock 2018 1.7 GBP - IPO 400.0 3.00 103.8 Price trading US$ millions US$ thousands 100.0 performa 2.50 300.0 GBP nce 2.00 200.0 50.0 1.50 100.0 1.00 - - 9-Nov-2015 9-Dec-2015 9-Jan-2016 9-Feb-2016 9-Mar-2016 9-Apr-2016 9-May-2016 9-Jun-2016 9-Jul-2016 9-Aug-2016 9-Sep-2016 9-Oct-2016 9-Nov-2016 9-Dec-2016 9-Jan-2017 9-Feb-2017 9-Mar-2017 9-Apr-2017 9-May-2017 9-Jun-2017 9-Jul-2017 9-Aug-2017 9-Sep-2017 9-Oct-2017 9-Nov-2017 9-Dec-2017 9-Jan-2018 9-Feb-2018 9-Mar-2018 9-Apr-2018 9-May-2018 9-Jun-2018 9-Jul-2018 9-Aug-2018 9-Sep-2018 9-Oct-2018 7-Nov-2018 9M18 7-Nov-2018 Note: (1) As of 28 September 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 7 November 2018 4 (3) Source: Bloomberg; Market Capitalisation of GHG as of 7 November 2018, GBP/USD exchange rate 1.31
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 1.6bln (2) addressable (1) GEL 0.2bln (3) GEL 1.3bln 2018F c. 25% by revenue Market Share c. 3% by revenue 30% by revenue 27% by revenue 24.9% by beds (total 3,320 beds) 15% 85% Selected 15% Operating 16 district polyclinics 16 district polyclinics 267 pharmacies in major cities c.158,000 individuals Data 16 hospitals 21 hospitals 21 hospitals 9M18 2,825 beds 495 beds 495 beds 7% 59% GEL 622.4 mln (4) 29% 2% 3% Revenue Gross 2012-9M18 2012-9M18 2012-9M18 GEL 41.2 mln GEL 188 mln GEL 18.2 mln CAGR 14% GEL 15.2 mln GEL 377.5 mln CAGR 41% CAGR 34% Financials 9M18 GEL 95.4 mln (4) 55% 4% 39% 2% EBITDA 2012-9M18 2012-9M18 GEL 53.1 mln CAGR 38% GEL 1.9 mln GEL 3.4 mln CAGR 26% GEL 37.0 mln EBITDA Margin: 25.5% EBITDA Margin: 12.2% EBITDA Margin: 9.8% EBITDA Margin: 8.2% ` Sources: (3) Insurance State Supervision Service Agency of Georgia (“ISSSG”), 9M18 annualised (1) Frost & Sullivan analysis. Market adjusted by the company to exclude the revenue from specialty beds - addressable market 5 (4) Net of intercompany eliminations (2) Frost & Sullivan analysis. Polyclinics market excludes revenue from dental and aesthetic services
Clear market leader (1/2) Broad geographic coverage and diversified healthcare services and pharmacy network covering 3/4 of Georgia’s population Extensive Geographic Coverage (1) Network of healthcare facilities and pharmacies 3,320 hospital beds 16 referral hospitals 3/4 of population covered 21 community clinics 16 district polyclinics 267 pharmacies Mestia 1 1 1 1 1 1 1 1 Chkhorotsku Tsalenjikha +1 1 1 1 1 Martvili Zugdidi 5 Sachkhere Tkibuli 1 1 Tskaltubo Khoni Tchiatura Khobi Senaki 1 Samtredia +1 1 2 1 +1 Kutaisi 3 1 Abasha 15 Lanchkhuti 1 3 Poti Terjola 1 1 1 Georgia 1 3 1 Ozurgeti 9 7 1 Gori 1 2 2 1 4 Zestafoni Akhmeta Khashuri Kaspi 1 +1 Kobuleti 2 165 1 Kvareli Kareli Telavi Baghdati Mtskheta +10 +1 1 Lagodekhi Chakvi 1 3 Akhaltsikhe 1 2 Borjomi 1 Gurjaani Number of Referral Hospitals +1 Adigeni Khulo Tbilisi 1 1 1 Sagarejo 12 Shuakhevi Aspindza Batumi 1 Keda Number of Community Hospitals 1 Rustavi 2 1 Akhalkalaki Tsnori 1 Marneuli 2 1 7 Gardabani Bakuriani Number of Pharmacies 1 1 1 2 Bolnisi 1 1 1 +1 District Polyclinics 1 + Dmanisi 2 1 Ninotsminda Regions of Presence Sources: GHG internal reporting 6
Recommend
More recommend
