2020 annual results

Medica RestrictedDocument classification:

medica.co.uk

2020 Annual Results

Analyst Presentation

Stuart Quin (CEO) and Richard Jones (CFO)

11 May 2021


Agenda

1. Highlights

2. Financial review 2020

3. Trading & market update

4. Business strategy update

5. Summary & outlook

6. Q&A

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Highlights• Financials in line with expectations

o Revenue £36.8 million, a decrease of approximately 21% year-on-year due to impact of Covid-19o Gross margins remained strong at 47.4%. Adjusted net operating profit margins of c. 14% in line with expectationso 13% increase in rostered reporting capacity and focus on increasing capacity in Australia/NZ

• Medica UK – Elective activity improving since year-end with positive outlook o Elective activity has continued to grow month-on-month so far in 2021, but has yet not reached pre-Covid levelso Recent contract wins and promising pipeline of opportunities for 2021 underpinned by underlying volume growtho Significant capacity available for NHS backlog. Positive outlook for H2 2021

• Acquisitions on track; enabling geographic growth and broader service offeringo Global Diagnostics Ireland (GDI)

o Integration of the business on track and rebranding completed. Focus on IT, Operations and sales synergieso Recent signs of recovery underpin positive outlook for 2021 overall

o RadMD USo Acquisition completed successfully. Strong backlog for 2021. Focus on expanding management team

• Strengthened balance sheet with equity raise and refinancingo Gross Debt of £17.9m and net debt at 31 December 2020 of £3.9m with gearing of 0.5xo 9.9% equity placing raised £16m in March 2021. Strong participation from existing as well as new investorso Refinance completed in early May 2021 with new £30m RCF with a new syndicate of three banks on competitive

terms

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Medica Group overview

Main market listing on London Stock

Exchange

Market Capitalisation £190M+

Over 300 employees

Network of over 750 radiologists,

specialist doctors and radiographers

As of May 2021:

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Continuing to deliver on our values

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Patient first and truly collaborative

Adaptive and pioneering

Excellence in our DNA

Responsible and accountable

• Launch of first AI solution to detect stroke

• Strategic JV in Australia/NZ (MedX) will

expand capacity for NightHawk service

• Partnership with Sectra as part of FutureTech

• Expansion into $1bn market for clinical trial imaging services via

acquisition of RadMD in US in March 2021

• Investing in our team: new Medical Director appointed, new Chief Commercial Officer, US

• Dr. Junaid Bajwa, Chief Scientist at Microsoft Research joins board

• Pro-bono reporting support for NHS

radiologists during Covid. No furlough.

• Extension of diabetic retinopathy screening

contract in Ireland


Financial review 2020


Comprehensive statement of income

• Results in line with trading statement on 21 January and 22 March

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FY 2020 FY 2019 YoY

£’000 Underlying* Underlying*

Revenue 36,814 46,542 (20.9%)

Gross Profit 17,452 22,250 (21.6%)

GPM 47.4% 47.8%

Operating Profit 5,003 11,297 (55.7%)

Operating Margin 13.6% 24.3%

PBT 4,737 11,030 (56%)

EPS (basic) 3.47 8.13 (57.3%)

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*Underlying results exclude one-off costs including costs relating to acquisitions and exceptional items


Financial position

• Results in line with trading statement on

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31 December 2020

31 December 2019

YoY

Non-current assets 44,932 27,115 17,817

Current assets 22,267 26,744 (4,477)

Current liabilities (14,123) (4,803) (9,320)

Non-current liabilities (16,623) (13,214) (3,409)

Net Assets 36,453 35,842 611

Cash and cash equivalents

13,934 16,576 (2,642)

Borrowings (17,841) (12,334) (5,507)

Net Debt (3,907) 4,242 (8,149)

• Financial position includes the impact of the acquisition of GDI in November 2020

• Net debt of £3.9m (2019 net cash of £4.2m) includes the positive impact of careful working capital management through 2020 but also includes impact of:

• Acquisition of Global Diagnostics Ireland in November 2020

• Reduced operating performance


Segmental analysis

• Strong performance from NH in a difficult year with revenues modestly increasing YoY having initially fallen to 40% of pre-covid levels then recovered through H2 2020

• Significant fall in EL revenues with initial volume decline of 95% in Q2 2020 followed by gradual improvement in Q3 2020 with subsequent impact of UK lockdown from December onwards.

• Q1 2021 has seen month-on-month increase in Elective activity.

• Ireland contributed for 8 weeks from completion of the acquisition on 3rd

November 2020

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£’000 FY 2020 FY 2019 YoY

UK Revenue

NightHawk 22,987 22,070 4%

Elective 12,511 24,470 (48.9%)

Total UK 35,498 46,542 (23.7%)

Ireland 1,316 - -

Group Total 36,814 46,542 (20.9%)

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Cash and working capital

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£’000 FY 2020 FY 2019

Cashflow from operating activities 5,683 12,668

Working capital 2,958 (2,961)

Net cash inflow from operating activities

8,641 9,707

Investing activities

Acquisition of GDI (13,813) -

Capex (2,008) (2,827)

Financing activities

Additional borrowing 5,963 -

Dividends (945) (2,612)

Other (550) (373)

Net change in cash (2,639) 3,988

• In 2020, careful working capital management also included the benefit of an unwind of trade debtors due to the reduction in operating activity due to the impact of Covid-19 in Q2 2020.

• The Group did not take account of any payment deferral or other government Covid-19 related schemes such as furlough

• Capex reduced by £0.8m due to investment in 2019 in the group data centres offset somewhat by higher spending on radiologist equipment due to higher levels of radiologist recruitment in 2020

• The undrawn RCF facility of £1m was extended to £6m and drawn down in November 2020 to part fund the acquisition of GDI with the balance of initial consideration coming from cash.

• A final dividend for 2019 was not recommended. An interim dividend of 0.85 pence per share was paid in October 2020

• Board proposing a final dividend for the year of 1.7 pence per share with the total dividends of 2.55 pence representing a 13% increase on 2018, the last year when a final dividend was declared.

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Debt refinancing • Debt at 31 December 2020 consisted of

o £12m term debt set up at IPO due for repayment in March 2022 with interest at base +1.75%

o RCF extended to £6m with a balance of £5.9m at 31 December 2020 with interest charged at base + 3%

• New 3 bank club RCF facility finalised in early May 2021

o Lloyds, NatWest and Silicon Valley Bank participating banks

o £30m total facility with a £22.5m accordion

o Term 3 years extendable by up to 2 years

o Interest payable based on leverage in the range SONIA +2% to + 3%

o Non-utilisation fees of 35%

o No change to borrowing covenant tests

o Maximum leverage 2.5x net debt to adjusted EBITDA

o Minimum interest cover 4x

• New facility draw down

o £12m drawn down from new facility to repay term debt

o RCF facility fully repaid from cash resources in early April 2021

o Gross debt post-refinance £12m

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Business strategy update


Execution of strategy

• Core business transformation taking shape: FutureTechinvestment underway due to launch Q1 2022

• >25% of Medica's revenue now coming from outside the UK

o Acquisition of Global Diagnostics Ireland in Nov 2020

o Acquisition of RadMD in the USA in March 2021

• >15% of revenue would be derived from diversified client base of private healthcare, CROs, pharma and Biotech organisations (remainder from NHS/HSE*)

• MedX JV in Australia provides opportunity to further expand teleradiology services into new countries

• Medica now offers broader range of services:

o Teleradiology & Managed Imaging services – clinical diagnosis

o Teleradiology – clinical trials

o Teleophthalmology – diabetic retinopathy screening

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* HSE = Health Service Executive (public healthcare system in Republic of Ireland)

Proforma 2020 Revenue

UK Ireland USA



Clinical diagnostic reporting:

Clinical trials:

UK InternationalIreland

TELEMEDICINE SERVICES

2020 Near term

Mid term

2021

Longer term

2021

Mid term

• Teleradiology

• Teleophthalmology

• Telepathology• New areas such as

telecardiology, tele-endoscopy

• Radiology study reading

• Imaging CRO

Expansion of telemedicine footprint

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Medica UK


Medica UK- Core NightHawk services

• We hold NH contracts with over 40% of UK NHS Acute Trusts and a number of independent providers

• 50%+ of Dec 2020 NH revenue came from clients who have been using Medica for 8 years or more, whilst 50%+ of Dec 2020 revenue was via contracts placed or renewed in the last three years

• Contracting routes for both new NH business and renewals include:

o Call Off via one of several UK Teleradiology frameworks

o Expansion of existing ‘Elective only’ customers

o Full OJEU tender process

• More than 75% of NH growth comes from additional revenue from existing clients due to:

o Commencement of NH at ‘Elective only’ clients

o Increasing activity levels in Emergency Departments

o Change in best practice guidance for patient management out of hours leading to

o More complex scans (e.g. MRI/CT replacing plain film)

o Increasing number of body parts per scan



UK 2020 Operational KPI’s

Increase in available rostered reporting hours

Adherence to SLA for NightHawk reporting13% >98%

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• Continued fast turnaround of NightHawk studies, averaging less than 23 mins per report

• Encouraging increase in available rostered reporting hours despite the volume downturn during the period. Reflects continuing focus on recruitment with more reporters waiting in pipeline

• Significant latent capacity and continuing focus on recruitment provides the ability to support enhanced Elective growth rates when required by clients.

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Strong recovery in UK Elective activityKey points

• Recovery underway, but expected to accelerate over summer:

o NHS ability to increase scanning capacity still limited by COVID measures

o NHS England Data shows only 735,680 CT/MR scans were performed in Dec 20, compared to 867,610 in Jan 20.

o Elective on an improving trend month to month since January, with current volumes ~50% of pre-Covid levels

• Pressure on NHS to resolve the huge backlog:

o NHS England stated in April that 388,000 patients were waiting over 12 months for elective procedures

o Backlog of 4.7 million patients exists

o NHS England Diagnostic Imaging Data sets shows over 1 million less CT/MR were performed Apr-Sept 2020, compared to the same period in 2019.

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* Source: NHS England 19/20 and 20/21 Diagnostic Imaging Datasets as @ 1/5/21

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Progress with FutureTech project

Highlights

• Project well underway

• 3- year roadmap until the end of 2023

• First major milestone is launch of new Sectra PACS in Q1 2022

• Augmented Intelligence solution fully deployed into stroke diagnosis workflow with good results & feedback from reporters

• Aim to improve reporter productivity and functionality and to deliver operating leverage from the end of 2023 onwards

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Medica Ireland


Ireland’s

Only

National Teleradiology

Provider

24 HSE Hospitals

(22 NIMIS)

All 7 Hospital

Groups

Largest

cohort of

IMC

Specialist

Register

Radiologists

Including Paediatrics,

Neuro, MSK and

General

24/7 365

reporting

200,000+

Exams in

Per

Annum

Scanning /

Reporting

24 IMC

Radiologists

in Ireland &

17 in the UK

Outsourced –

Equipment,

Staffing,

Technology,

Quality

Waiting List

Management

Experts

.

37 Clinical

Locations

CHKS

Accredited &

ISO Certified

.

Medica Ireland (formerly Global Diagnostics)

Provider of Diabetic

Retinopathy Screening &

Surveillance in Leinster

50% of the Diabetic

Population in Ireland

50k+ Patients

Per Annum

On Call & Urgent

Reporting

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Medica Ireland update

• Recovery well underway

o Strong month-on-month recovery in activity

o Medica Ireland well-positioned to support HSE with backlog work

o Extension of diabetic retinopathy screening service for further 12 months

• Integration on tracko Rebranded GDI to Medica Ireland

o Focus on operations to support teleradiology service

o Significant increase in reporter capacity from UK based Irish qualified radiologists

• Positive growth outlook

o New contract wins since acquisition in November

o Significant private sector partnership established

o Strong pipeline of contract opportunities with public hospitals, particularly in NightHawk services



Medica USA- RadMD


RadMD update

Key points

• A leading Imaging and Reader services company focused on the fast-growing clinical trials market based in Philadelphia area with revenues of $8.9 million in 2020 & EBITDA $1.2m

• Provides high-value imaging expertise services and applies advanced systems to reduce costs and improve efficiency in drug and device development to pharmaceutical/biotech and Contract Research Organisations (CROs)

• Acquisition completed 25 March for upfront consideration USD 16.3m (£11.7m) and total consideration of up to 21.7m (c. £15.6m)

• Trading in line with expectations: backlog & pipeline supportive of 2021 budget target

• Progress since acquisitiono Post completion visit by Medica management in Mayo Chief Commercial Officer appointedo Search underway for Head of Operations & Finance Manager



Summary & outlook


Summary and outlook

• Resilient performance in 2020 laying the foundation for strong recovery from 2021 onwards

• Strong cash position driven by prudent cost management

• Successful equity raise to support M&A and debt refinancing

• Significant progress in delivering against strategic objectives

• Expect improved 2021 performance to continue

• Focused on:o Supporting recovery in Elective activityo Accelerating growth in Nighthawko Continuing to execute on the growth strategy



Q&A

2020 annual results

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