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Disclaimer Certain statements in this presentation may contain assumptions or forecasts with respect to forthcoming events within the Medsi Group of Companies and its subsidiaries (“Medsi” or “the Group”). The words “expect”, “estimate”, “intend”, “will”, “could” and similar expressions identify forward-looking statements. We wish to caution you that these statements are only predictions and that actual events or results may differ materially. We do not intend to update these statements to reflect events and circumstances occurring after the abovementioned date or to reflect the occurrence of unanticipated events. Many factors could cause the actual results of Medsi to differ materially from those contained in our projections or forward-looking statements. Among others, these include deteriorating economic conditions, our competitive environment, risks associated with operating in Russia, rapid technological and market change in our industries, and many other risks specifically related to the Group and its operations.
Main events in 1H13 Medsi has completed the consolidation MCMGM and determined the development strategy for the Group as a full-cycle provider of medical services
Key indicators of the Group In 1H13, Medsi significantly improved its operational indicators, with revenues rising by more than 50%
Main financial results 53.8% • The key driver of year-on-year revenue growth of 53.8% was a 32.2% increase in visits, including 28.0% attributable to the Group’s “new assets” as well as a 9.9% increase in the average ticket. • OIBDArose by 39.3%during the reporting period against a backdrop of dynamic revenue growth. • OIBDAmargin declinedslightlycompared to 1H12 • The group posted a net profit of US$0.4 million due to various measures to enhance operating efficiency Revenues, US$ mln IH12 1H13 +39.3% 15.2 OIBDA, US$ mln 10.9 1H12 1H13 OIBDA margin, % 0.4 Net profit, US$ mln -3.4 1H12 1H13 Growth in revenue and OIBDA was achieved mainly through a rise in the number of visits and an increase in the average ticket, linked primarily to the consolidation of the Group’s new assets
Operating expenses +43.3% • The share SG&A in total revenues fell by 1.1 pps to 14.0% compared to 1H12. • The 43.3% growth of sales, general and administrative expenses was attributable, primarily, to an increase in consulting costs and these were linked primarily to the preparation of the Group’s new development strategy as it consolidates new assets. • Growth in cost of sales was due the volume of services provided through the merged assets, as the majority of revenues at these facilities comes from fixed-price contracts. SG&A, US$ mln 1H12 1H13 +63.4% Cost of sales, US$ mln 1H12 1H13 An increase in operating expenses occurred against a background of a significant expansion in the Group’s business, while revenue growth outpaced the increase in SG&A expenses
Debt +7.1% • The net debt of the Group, calculated as the sum of short-term and long-term obligations net of cash and cash equivalents, stood at US$42.7, a reduction of 17.9% since the beginning of 2013. • The small increase in the total debt of the Group is attributable to the receipt and payment of individual tranches of loans, as well as changes in the US dollar exchange rate. • All of the Group’s debt is denominated in rubles. Total debt, US$ mln 73.4 78.6 1H12 1H13 -17.9% Net debt, US$mln 2012 1H13 The Group’s net debt was reduced by 17.9% due an increase in cash flow
Healthcare/MoscowandMoscow region Space and revenues per m2 Revenues, US$ 64.6% +62.9% 60 2,250.2 200 000 2 500 50 159,813 2 000 150 000 40 1 500 795.9 30 100 000 1 000 20 50 000 34,708 500 10 0 0 0 1H12 1H13 1H12 1H13 Revenue/m2 Space m2 Visits, ‘000s Main events 33.2% • Thereductioninrevenues/m2wasattributabletothemergerof MCMGM assets and inclusioninthisratioofthespaceofthein-patient and rehabilitationcenters, forwhichthisratioissignificantlylower. • A range of new medical programs were launched: additions were made to “Designer Health”, the “Diabetes” program was launched along with two new programs based at the children’s clinic at Pirogovskaya. 2 025.9 1 520.9 1H12 1H13 The merger of MCMGM assets has significant potential for the further development of the in-patient care segment
About Medsi Medsiis a leading national provider of medical and healthcare services in Moscow and other regions • Number one on the Russian market • 4.9% of the private healthcare market in Moscow* • 1.6% of the private healthcare market in Russia** • 30clinics, 3 hospitals, 79 medical posts, 3 rehabilitation centersand 3 fitness clubs • Presence in 18Russian cities • Developed range of formats • Developed range of formats • High-quality medical service • Over 173,000m2of medical space * Medsi’scalculation based on figures from BusinesStat for 2012, excluding the ‘gray’ segment ** Medsi’s calculation based on figures from BusinesStat for 2012, share of clinics excluding mandatory medical insurance Medsi has leading positions on the private healthcare market in Moscow and Russia
Group’s assets today • Hospital no. 1: PyatnitskoyeShosse • Hospital no. 2: BotkinskyProyezd • Hospital no. 3: MinchurskyProspekt • Center at Belorusskaya • Medsi International Clinic • Clinic no. 1: BlagoveshchenskyPereulok • Clinic no. 2: UlitsaSolyanka • Clinic no. 3: KhoroshevskyProyezd • Clinic no. 4: UlitsaBolshayaCheryomushkinskaya • Children’s clinics: • MedsiII: UlitsaBolshayaPirogovskaya • Clinic no. 5: BlagoveshchenskyPereulok 3 Hospitals 7 Clinical and diagnostic centers • 12clinics in Moscow • 11clinics in the regions • 79medical posts throughout Russia 23 First-aid clinics • Olympic Star • Kaskad (Cascade) • SerebryanyBor 3 Fitness centres • SerebryanyBor • Otradnoye (Moscow Region) • Mellas (Crimea, Ukraine) Other assets 3 Rehabilitation centers • Concierge service/help at home • Own first aid • Laboratories Today Medsihas a unique group of assets and is correctly structured for future growth
Full-cycle provision of medical services Preventative treatment and early diagnosis Wellness and healthcare services First aid and specialist care Care for the terminally ill – hospice Gerontology Specialist medical care at home Emergency assistance Rehabilitation Neurological care In-patient treatment First aid MEDSI before 2012 МEDSIafter the deal with MCMGM Target areas for development Medsi is a full-cycle provider of medical services 12
Drivers of the private healthcare market in Russia Stable GDP growth… … together with rising real income… +9.8% +9.9% +11.8% +8.8% … and an ageing population in Russia… … is driving demandfor private healthcare Source: BusinesStat, EIU,Rosgosstrakh, World Bank Rising wealth, an ageing population and a lack of high-quality services are driving the development of private healthcare
Private healthcare market in Russia Forecast for the private healthcare market in Russia,RUB* * Figures from BusinesStat for 2012 • In 2012, BusinesStat estimates that the market grew by 11.5% • Over the next five years, average growth is forecast at over 10% annually, while the share of the ‘gray’ sector is expected to shrink • In the next few years, the amount of ‘gray’ payments in clinics is expected to fall: BusinesStat estimates that their share will be 6.6%of the total by 2017 (including mandatory medical insurance). In 2012, the share was 9.2%. Breakdown of the market by service in 2012** Most of the demand for private healthcare services will come from insurance companies ** Figures from BusinesStat for 2012
Thank you! For more information, please contact: Medsi Group of Companies Svetlana Ponkratova Tel:+7 (495) 737 0722, ext. 137 firstname.lastname@example.org