Georgia Day 2018 – GHG Performance and Strategy
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GHG performance and strategy Speaker: Nikoloz Gamkrelidze, CEO Georgia Healthcare Group A Long-term, High-growth Investment Story Georgia Day UK, London | October 2018 Investor Presentation - FY2015ghg.com.ge results February 2016 Content GHG overview Business 2018 performance Progress towards long-term KPI’s GHG focus and strategy going forward Annexes 2 GHG - The largest fully integrated healthcare provider and the only scalable player in the region GHG businesses Healthcare services Pharmacy and distribution Medical insurance Referral hospitals & Clinics Pharmacies & Wholesale Corporate packages 16 referral hospitals 21 community clinics 17 district polyclinics 259 pharmacies Wholesale 157,000 individuals insured with 2,825 beds with 495 beds 24 express outpatient clinics c. 25% revenue from providing secondary providing primary providing primary 21 of which are located in c.40% claims retained within wholesale to medium and tertiary level out - and inpatient outpatient services our healthcare facilities the Group sized players and healthcare services healthcare services hospitals GHG revenue GHG EBITDA GHG revenue distribution breakdown by segments breakdown by segments by payment sources 6% 1% Pharmacy and distribution 22% 39% Out-of-pocket 34% Healthacre services UHC 60% 60% 24% 54% Other Medical inusrance 1H18 Revenue - GEL 419.5 mln 1H18 EBITDA - GEL 62.6 mln Source: GHG internal reporting 3 Network of healthcare facilities and pharmacies Covering 3/4 of Georgia’s population 3,320 hospital beds 16 referral hospitals 21 community clinics 17 district polyclinic 24 express outpatient clinics 259 pharmacies Mestia 1 1 +1 1 1 1 1 1 1 Chkhorotsku Tsalenjikha +1 1 1 1 Martvili 1 Zugdidi Number of Referral Hospitals 7 Sachkhere Tkibuli 1 1 Khoni Tskaltubo Tchiatura Khobi Senaki Number of Community Hospitals Samtredia +1 1 2 1 1 +1 Kutaisi Abasha 3 1 Number of Pharmacies Lanchkhuti 11 Poti 1 3 1 Terjola 1 1 Ozurgeti 1 3 Georgia District Polyclinics 1 8 7 + 1 Gori 1 2 Zestafoni Akhmeta 1 4 Khashuri Kaspi +1 Kobuleti Regions of Presence 2 Kareli 164 Telavi Kvareli Mtskheta +10 +1 1 Chakvi 1 Lagodekhi Akhaltsikhe 3 Adigeni 2 1 1 Gurjaani Khulo Tbilisi Sagarejo Shuakhevi 1 1 1 Batumi 11 Aspindza Keda Rustavi 1 1 Akhalkalaki 1 2 Tsnori 2 1 1 Marneuli Bakuriani 5 Gardabani 1 1 1 Bolnisi 2 1 +1 1 1 1 Dmanisi 2 Ninotsminda 1 Sources: GHG internal reporting 4 GHG – leader in Georgian healthcare ecosystem Healthcare services (Hospitals) Pharmacy and distribution Medical Insurance (1) (2) (Gross premium revenue 1Q18, GEL million)(3) (Number of Beds as of June 2018) (Revenue, 2017 GEL millions) 38 % Vienna Insurance 17 GHG in healthcare services 3,320 25% 37 Group 36% GHG in pharma 450 30% GHG in medical 13 Aversi 653 5% 9 insurance 27% Ardi Vienna Insurance Group 608 5% 14 PSP 410 27% 5 11% PSP Ghudushauri-Chachava 511 4% 3 3 7% Aversi 270 18% Aversi Inova 244 2% 3 2 4% IC Group 1 PSP 145 1% 1 2% Other 378 25% Other 6 Other 7,871 58% 188 13% Market share Number of hospitals Market beds dynamic: 20164 20175 1H181 • The number of GHG’s beds are increasing in line with its expansion strategy Total number of beds 10,948 12,284 13,352 Competitors 8,391 9,270 10,032 • Increased competition is mainly coming from small and medium sized hospitals GHG 2,557 3,014 3,320 GHG market share 23.4% 24.5% 24.9% Sources: (1) NCDC, data as of December 2017, updated by GHG to include changes before 30 June 2018; excluding speciality beds (4) NCDC, data as of December 2015, updated by GHG to include the changes before December 2016; excluding speciality beds (2) Total market Frost & Sullivan analysis 2017. Revenue distribution between competitors represents managements estimates. (5) NCDC, data as of December 2016, updated by GHG to include the changes before December 2017; excluding speciality beds (3) Insurance State Supervision Service Agency of Georgia as of 31 March 2018 5 Healthcare expenditure Growth in healthcare market expected to continue GEL millions 7,000 • In 2018 total healthcare market is 6,000 CAGR ‘18-’21 estimated at GEL 3.8 billion 4,765 5,000 4,397 4,062 10% 3,760 968 4,000 3,488 884 • Country’s expenditure on healthcare - 3,218 806 3,062 734 669 7% 3,000 2,464 607 1,722 c.9% of GDP 696 1,611 2,034 1,504 543 1,404 2,000 1,716 1,217 1,311 1,552 438 1,092 305 343 908 782 9% • C.30% of total healthcare expenditure 1,000 675 714 1,903 2,075 1,395 1,508 1,622 1,752 1,013 1,273 573 659 814 is financed by the State - 2011 2012 2013 2014 2015 2016 2017F2017E 2018F 2019F 2020F 2021F Pharma Hospitals Polyclinics • Government expenditure on Source: Frost & Sullivan analysis 2017; Hospitals market includes revenue of c.10% from specialty beds, which is non-addressable market for GHG healthcare as a % of GDP reached Polyclinics market excludes dental and aesthetic services c.3% from 1.6% in 2013 State financing of healthcare GEL millions • Government spending on healthcare 1,800 12% 1,600 10% 9% 9% 9% 9% 10% accounts c.9% of total budget 1,400 1,200 8% 1,000 6% • State is in line with healthcare budget 800 710 704 754 in 2018 600 574 681 4% 400 2% 200 281 301 357 383 393 - 0% 2015 2016 2017 2018E 2019B State Healthcare Spending - UHC State Healthcare Spending - Other Source: GHG internal reporting Healthcare spending as a % of total state spending Source: Ministry of Finance of Georgia 6 Content GHG overview Business 2018 performance Healthcare services Pharmacy and distribution Medical insurance Mega Laboratory Progress towards long-term KPI’s GHG focus and strategy going forward Annexes 7 16 referral hospitals • 2,825 beds • 22% market share by beds in Tbilisi • 85% revenue share in healthcare services business • US$ 42,000 revenue per referral hospital bed in 1H18 • Bed occupancy rate1 in 1H18 - 57.8% • Bed occupancy rate without newly launched Regional Hospital and Tbilisi Referral Hospitals beds in 1H18 - 65.8% • Average length of stay2 in 1H18 - 5.5 days Source: GHG internal reporting (1) Excluding emergency beds 8 (2) Excludes data for the emergency beds • 495 beds 21 community • 8% revenue share in healthcare services business clinics • Average bed occupancy rate1 in 1H18 - 27.5% • Average length of stay2 in 1H18 - 4.2 days Source: GHG internal reporting (1) Excluding emergency beds 9 (2) Excludes data for the emergency beds Successful launch of 306 bed Regional Hospital • Since 3Q18 the hospital has already started to generate positive EBITDA • Occupancy level c.15% in 2Q18 – within four months of hospital’s opening • Gross Revenue reached GEL 5.3 million in 2Q18, up 340.9% q-o-q • More than 75% of revenue comes from elective care services • More than 50% of revenue is paid out-of-pocket - in line with our initial plan Key services offered Services to be added in coming months • Ophthalmology • Cardio surgery – October 2018 • Gynecology • Mammalogy – September 2018 • General Surgery • Onco hematology inpatient department – October 2018 • Neurosurgery • Angio surgery • Trauma/orthopedics • Urology • Interventional Cardiology 10 Update on 332 bed Tbilisi Referral Hospital • Since 1Q18 the hospital started to generate positive EBITDA • Occupancy level reached c.40% in 2Q18 • Gross Revenue reached GEL 4.1 million in 2Q18, up 10.6% q-o-q Key services offered • Ophthalmology • Gynecology • General Surgery • Neurosurgery • Angio surgery • Trauma/orthopedics • Urology • Interventional Cardiology Services to be added in coming months • Cardio surgery – October 2018 • Oncological surgery – October 2018 • ENT surgery – October 2018 • Ophthalmology – November 2018 11 Investing in service development to cover existing service gaps in the country • Retaining Georgian citizens that used to seek treatment overseas • Service export to foreign patients • In last three years we have launched more than 120 new services in our different hospitals, including some basic services such as ophthalmology and cardio surgery, as well as sophisticated ones such as liver transplant, transplantation of bone marrow and paediatric kidney transplant • In 2018, we are planning to launch services including hybrid vascular surgery and minimally invasive cardiac surgery • In polyclinics adding aesthetic and dental services 12 Update on polyclinics Increasing the number of patients at our Polyclinics Currently GHG operates 17 polyclinics and 24 express clinics The Polyclinic business is to become the number one tool for customer acquisition at GHG Insurance Patient flow GHG District Polyclinic Hospitals District Registered Patient flow Polyclinic Polyclinic District District Polyclinic Polyclinic GHG OOP Pharmacies District Polyclinics Express outpatient clinic We are in line with our target of c.200K registered patients by early 2019 Process started at June 2017 As of June 2018 116,000 200,000 Target by early 2019 (Cross selling potential within GHG) 13 New generation of doctors and clinical quality development We invest in the next generation of doctors and nurses, and position ourselves as the employer of choice • High quality clinical key performance indicator monitoring systems are implemented in all our referral hospitals • In 2018 we have developed projects related to antibiotic stewardship, that covers surgical prophylactic antibiotic therapy and rational antibiotic therapy improvement, implementation of which are already started in our referral hospitals GHG Doctor & Nurses GHG residency programme • Liver transplantation – since Retraining Programs 2014 the number of completed • The total number of specialties surgeries reached 24, mortality reached 25 In 2018, 1,000