Res esults lts for r the e yea ear en ende ded 3 d 31 Dec ecem ember ber 2018 18 March 2019
Impor orta tant nt disclai laimer er The information contained in these slides and the accompanying oral presentation (together, the Presentation) has been prepared Medica Group plc (the “Company”) . The Presentation is subject to updating, completion, revision and amendment without notice and as such it may change materially. Neither the Company nor any of the Company's other advisers or representatives, shall have any obligation to update, complete, revise, verify or amend the Presentation. The Presentation is confidential and is being supplied to you solely for your information and may not be reproduced, redistributed or passed on to any other person or published in whole or in part for any purpose. By accepting receipt of the Presentation, you agree to be bound by the limitations and restrictions set out in this disclaimer. No undertaking, representation, warranty or other assurance, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained in the Presentation. Neither the Company, nor any of their respective directors, officers, partners, employees, agents, advisers or representatives shall have any responsibility or liability whatsoever (for negligence or otherwise) arising from any use of the Presentation or otherwise arising in connection with the Presentation. Nothing in the Presentation constitutes investment advice or any recommendation regarding the securities of the Company. The Presentation contains certain statements that are or may be deemed to be “forward -looking statements”, which are based on current expectations and projections about current events. These statements typically contain words such as “targets”, “believes”, “intends”, “may”, “will”, “should”, "expects" and "anticipates" and words of similar import. By their nature, forward looking statements involve risk and uncertainty because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance. 2
Today’s agenda 1. 1. Hi Highligh ghts ts 2. Financial review 3. Business strategy and outlook 4. Q&A 5. Appendix 3
2018 8 highlight ights Continued to deliver strong double digit organic growth in line with market expectations ▪ ▪ Maintenance of gross profit margin and EBITDA margin ▪ Maintained market leading position in the UK ▪ Strong radiologist recruitment ⎻ 56 net additions during 2018 ⎻ 362 contracted as at 31 December (December 2017: 306) ⎻ As of today 375 ▪ Started internationalisation of Medica ▪ Development of specialist services ▪ Increasing investment (people and technology) to support future double digit growth and margin protection ▪ Final dividend proposed of 1.5p per share (2.25p for full year) 4
Today’s agenda 1. Highlights 2. 2. Financial ancial review iew 3. Business strategy and outlook 4. Q&A 5. Appendix 5
Inco come stateme tement nt ▪ Double digit revenue growth driven by existing customers 2018 2017 % change ▪ Gross margin maintained but expected to reduce over the next 18 months Revenue 38,969 33,715 15.6% Modest price decreases in the period (as ▪ previously guided), partly offset by Gross profit 19,086 16,432 16.1% increased complexity of exams Gross profit margin 49.0% 48.7% 0.3% ▪ Administration costs increased 19% on comparative period reflecting increase in EBITDA (1) 11,938 10,581 12.8% staff numbers, investment in IT and new services to maintain future growth and EBITDA margin 30.6% 31.4% -0.8% full period PLC costs ▪ Modest reduction in EBITDA margin, still Adjusted EPS (pence) (2) 7.75 6.92 12% above 30% (1) EBITDA is a non-IFRS measure and is calculated as operating profit before depreciation, amortisation, exceptional items, and share based payments. (2) Adjusted earnings per share is a non-IFRS measure and is calculated as earnings per share before exceptional items (including certain exceptional costs relating to refinancing), 6 share based payments and amortisation in respect of assets acquired on acquisition
Servic vice line highli ligh ghts: ts: Strong rong revenu nue and volum ume e growth wth Servi vice e line ne revenue ue Revenue Revenue Volume Gross profit Gross profit 1,000s 19,312 growth growth 2018 2017 20,000 16,798 14,963 15,000 13,536 NightHawk 15.0% 19.4% 49.9% 50.5% 12,542 2016 10,508 Cross Sectional 19.3% 21.6% 51.9% 52.1% 2017 10,000 2018 3,927 Plain Film 7.2% 7.9% 49.4% 49.4% 3,876 3,665 5,000 - ▪ Growth th from m existing sting clients ents Plain Film Cross Sectional NightHawk ⎻ 85% of the growth in 2018 from 2017 from existing clients 2018 Revenue by joining year ⎻ Average client revenue increased 17% from 2017 2018 2017 2016 ⎻ Increased routine penetration as partnerships grow 2% 3% 4% ⎻ Growth in Nighthawk demand 2015 4% ▪ Stable e client ent base 2014 10% ⎻ 61% of revenue is from clients with Medica in 2012 or earlier, 87% before 2015 2013 2012 ⎻ Two first time outsourcers added in 2018 16% 61% ⎻ Renewal of two largest clients in 2018 7
Cashf hflo low Year to 31 Year to 31 £000 000s December er 2018 December er 2017 Highly cash generative with strong cash ▪ Operating ing activ ivit itie ies conversion Profit before tax 9,156 5,662 Depreciation and amortisation 2,141 1,992 ▪ 65% of CAPEX on expansionary Share based payments 135 74 radiologist and client equipment Net finance costs 261 1,193 Movement in debtors and creditors 112 (2,503) Tax paid (2,172) (904) ▪ Dividend of 1.5p/share to be paid in Net cash inflow from operating activities 9,633 5,514 June 19 Investing activities (1,591) (1,420) ▪ Net cash of £0.6m at year end. Equity and borrowing movement (473) - Interest paid and loan fees (305) (816) Dividends paid to ordinary shareholders (2,056) (611) Net cash inflow/(outflow) from financing (2,361) (1,900) activities Net chang ange in cash h and cash h equival alent nts 5,681 2,194 Movement nt in net cas ash Cash and cash equivalents, beginning of 6,907 4,713 period Increase in cash and cash equivalents 5,681 2,194 Cash h and cash h equivalents alents, end of period 12,588 6,907 Source: 1 Audited group accounts under IFRS full year 2018 and 2017 8
Today’s agenda 1. Highlights 2. Financial review 3. 3. Busine ness s strat ateg egy y and outlook ok 4. Q&A 5. Appendix 9
Busines ness s overv ervie iew: w: Good od progress gress since ce IPO At IPO year ar end At 31 Decembe mber Trend nd Met etric ic Comm mments ts (31/12 /12/20 /2016) 1 2018 Revenue £28.5m £39.0m Organic growth only in 2017 and 2018 Revenue from 77% 87% Increased penetration of existing customers clients > 3 years EBITDA margin 32.4% 30.6% PLC costs reduced margin as expected Strong cash generation Net debt (Cash) £10m 2 (£0.6m) Net cash of £0.6m at end of 2018 Number of 46% increase; strong recruitment to date and 248 362 radiologists good pipeline Maintained market leading position. Market share ~50% ~50% (Estimate based on market intelligence) NightHawk and Cross Sectional average price fall Pricing GP 49.8% GP 49.0% as expected. Continued pressure expected. (1) IPO numbers based on audited accounts for the year ended 31st December 2016 (2) Net debt as at IPO 10
Ou Our Strategy tegy Leveraging aging our Core Business iness To Global alise se Tele-Radi Radiol ology ogy nally rnationa nding Internati Expanding Opti timis mising ng The Core Busi siness ness 11
Busines ness s overv ervie iew: w: Marke arket t drivers vers incr creasing asing demand nd Mark rket et growth th ▪ Increasing expectations for quicker diagnostic response. CQC instructed the National Imaging Optimisation Delivery Board to INCREA REASIN SING develop standar ards for repor orti ting ng turnar aroun ound times es for the first t time DEMA MAND ▪ An agein ing demog ogra raphic ic ▪ More conditions are suitable for diagnostic reporting ▪ More e images es being ng pro rodu duced ed per r scan ▪ Drive for early diagnosis ▪ Growth in A&E admissions requiring diagnostic imaging ▪ NICE E guidelin delines es evolving ng to include more diagnostic imaging GRO ROWTH H IN OUTSOU SOURCIN CING ▪ Move to 7-day working is expected to further drive growth Radiologis gist t shorta tage e – RCR 2017 7 census us NHS UNABLE LE TO MEET NEW CQC STANDARDS ▪ Increasing radiologist gap from 1,000 consultants currently increasing to 1,600 in five years time CONTIN INUED ED SHORT RTAGE OF RADIO IOLOGIS OGISTS ▪ Only 3% of radiolog iology departm tment ents s able le to meet t their eir repor ortin ing requirem irement ents s within staff contracted hours ▪ 44% of radiology departments disclosed that some images ANNUAL L GRO ROWTH H IN UK SCAN VOLU LUMES MES were auto-reported or unreported ▪ Vacancy rate rose from 8.5% in 2016 to 10.3% in 2017 12
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