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Primary Health Care Ltd

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  1. Primary Health Care Ltd BBY HEALTHCARE CONFERENCE 29 NOVEMBER 2006

  2. Topics Covered • What we do • Why the model works • Financial outcomes • Environment • Future Growth

  3. What We Do • Community based health care services • Large multi-specialty medical centres (>80 medical professionals in established centres) • Co-ordinate the delivery of all out-of-hospital health care services • Including GPs, specialists, day surgery, pharmacy, pathology, radiology, occupational medicine, rehab co-ordination, para-medical (physio, dental, dietician, etc) • Understanding patient needs and attempting to meet them

  4. What We Do • Community based health care services • Campbelltown Medical & Dental Centre • Opened 2000 • ~ 13,000 GP consults per month • Consultant Specialists/Para-medical • Diagnostic Imaging (CT, U/S, etc) • Pathology Collection

  5. What We Do • Three Business Segments Medical centres -multiple businesses within each centre • NSW = 20 • S.A. = 4 • Vic = 4 • ACT = 2 • Qld = 1 • Contribute $69.7m in EBITDA to group in FY06 • Circa 4.0 million primary care consultations in current year • Pathology - Circa 1.5m episodes this current year • Main lab in Sydney and now expanding interstate • Revenue gains of 15% last year being maintained • Health Technology - EBITDA $9.6M 2006 • Medical Director and other software products

  6. Why the Model Works • Key Benefit to Patients • Primary manages and co-ordinates the delivery of those various services to: • Deliver Key Benefit to Patients • Broad range of medical services available under one roof • Highly accessible, community based • Competitively priced • The standard of care in the centres is provided in peer environment • Extended hours of operation, extended range of services

  7. Why the Model Works • Key Benefit to Doctors • Primary manages and co-ordinates the delivery of those various services to: • Deliver Key Benefit to Medical Providers • Evidence suggests pre-tax doctors income improvement circa 30% in year one upon relocation into centres and improving thereafter • Capital payment • Focus upon practicing medicine (increase in billing time and efficiency) • Peer collegiate environment

  8. Why the Model Works • Key Benefit to Payor / Govt. • Primary manages and co-ordinates the delivery of those various services that results in delivery of Key Benefit to Govt. • Health delivery, cost of service and accessibility consistently ranks in top 2 or 3 voter issues. • Aging population and technological advances => continual fiscal pressure • S.A. statewide general rates of bulk-billing up 16 percentage points in twelve months to August 05. • Electorates of Blaxland and Chifley (Bankstown Mt Druitt etc) have bulkbilling rates in general community of 96.4% to 98.3% • Provides health services in an efficient, voter endorsed and cost effective manner

  9. Financial Results : Summary • EBITDA and EBITA up 31% and 34% over 2005 - Driven largely by organic revenue growth, medical centre margin gains and contribution by Health Technology 2006 2005 ($ Million, except EPS) growth Revenue 241.9 193.7 25% EBITDA 94.5 72.2 31% EBITA 80.1 59.9 34% NPAT 47.5 37.6 26% Basic EPS 39.37 33.84 16%

  10. Financial Results : Income Statement • Segmental • All segments meeting expectations • Medical centre results after head office costs of $12.2m inc. $2.1m share option expense • - AIFRS adopted effective 1 July 2004 all comparatives adjusted ($ 000s) 2006 2005 Medical centres 69,704 56,345 Pathology 14,004 13,144 Health Technology 9,559 (46) 2,779 Investments/other 1,191 EBITDA 94,458 72,222 12,367 14,397 Depreciation EBITA 80,061 59,855 Intangible amortised 1,421 4,856 EBIT 75,205 58,434 Interest expense 7,494 5,423 PBT 67,711 53,011 Tax charge 15,389 20,231 Profit After Tax 47,480 37,622

  11. Financial Results : Balance Sheet Debt to Equity : 06/06 06/05 31% 25% EBITDA interest cover: (assuming 7.00%) 06/06 06/05 11x 12x

  12. Financial Results: Medical Centres • GP patient attendances up 16.6% to 3.44m for the year • July 2006 GP patient attendances up 20% on prior year • 7 centres opened in FY 2006 all increasing in line with expectations • 7 new medical centres opened successfully during period accounted for 6% growth in patient attendances • Medical Centre revenues to PRY up $24.1m (21%) to $140.8m for the period • Total of 117 practices contracted for in period for $40m

  13. Financial Results : Medical Centres • Strength of core business • EBITDA for all centres up 24% • Margins improvement across all centres to 49.5% from 48.3% prior year and 49.0% six months to 31 December 2005 • After charging share option expense of $2.1m (prior period $1.3m) • Same-centre EBITDA growth period on period Oldest 8 centres opened pre 30 June 2000 at 7.6% 3 Centres opened FY 2005 contributed $6.8m EBITDA • Recurrent capital expenditure continues at historic levels

  14. Financial Results : Pathology 2006 2005 2004 growth ($ 000s) growth Revenue 79,136 68,280 63,217 16% 8% 14,004 EBITDA 13,144 12,421 6.5% 5.8% Margin 17.7% 19.3% 19.6% 12,596 EBITA 11,581 10,921 9% 6% Margin 15.9% 17.0% 17.3% • Organic Growth component of Revenue very encouraging • Margins affected by: • Infrastructure costs as a result of expansion into new markets • Some pressure on core business costs

  15. Environment Medium Term Cycle of Significant Demand Growth

  16. Environment FRAGMENTED HEALTH CARE PROVIDERS + BUDGET REQUIREMENTS AND COST PRICE PRESSURE    CONSOLIDATION GPs approx 9% consolidated Pathology approx 70% consolidated `

  17. Future Growth • Considerable Nationwide opportunity • Primary Health Care accounts currently for approximately 3-4% of the nationwide market • Combined with: • Ageing Population • Increase usage of diagnostics • Increase usage of technology

  18. Future Growth • Medical centre growth to come from: Historic organic growth of established centres Newly opened centres Further 9 centres by 31 December 2007 Still fragmented market (estimate Primary share 3% National Market) • Investment for each new centre continues in line with historical • Pathology revenue continuing to grow 15% organically