analyst meeting no. 4/2012 3q12 results...
TRANSCRIPT
PG.1
Bumrungrad Hospital Public Company Limited
Analyst Meeting No. 4/2012 – 3Q12 Results Update
16 November 2012
PG.2
Disclaimer • The information contained in this presentation is for information purposes only and does not constitute an offer or invitation to sell or
the solicitation of an offer or invitation to purchase or subscribe for any securities of Bumrungrad Hospital Public Company Limited (the
"Company") in any jurisdiction nor should it or any part of it form the basis of, or be relied upon in connection with, any contract or
commitment whatsoever.
• This presentation is being communicated only to persons who have professional experience in matters relating to investments and/or
to persons to whom it is lawful to communicate it under the laws of applicable jurisdictions. Other persons should not rely or act upon
this presentation or any of its contents.
• Certain information and statements made in this presentation contain the Company's forward-looking statements. All forward-looking
statements are the Company's current expectation of future events and are subject to a number of factors that could cause actual
results to differ materially from those described in the forward-looking statements. Prospective investors should take care with respect
to such statements and should not place undue reliance on any such forward-looking statements.
• This presentation has been prepared by the Company solely for the use at this presentation. The information in this presentation has
not been independently verified. No representation, warranty, express or implied, is made as to, and no reliance should be placed on,
the fairness, accuracy, completeness or correctness of the information and opinions in this presentation. None of the Company, any of
its affiliates or any of their respective agents, advisors or representatives, shall have any liability (in negligence or otherwise) for any
loss or damage howsoever arising from any use of this presentation or its contents or otherwise arising in connection with this
presentation. The information presented or contained in this presentation is current as of the date hereof and is subject to change
without notice and its accuracy is not guaranteed. None of the Company, any of its affiliates or any of their respective agents, advisors
or representatives, makes any undertaking to update any such information subsequent to the date hereof.
• This presentation should not be construed as legal, tax, investment or other advice. No part of this presentation shall be relied upon
directly or indirectly for any investment decision-making or for any other purposes. Prospective investors should undertake their own
assessment with regard to any investment and should obtain independent advice on any such investment’s suitability, inherent risks
and merits and any tax, legal and accounting implications which it may have for them.
• Certain data in this presentation were obtained from various external data sources, and none of the Company, any of its affiliates or
any of their respective agents, advisors or representatives have verified such data with independent sources. Accordingly, the Company
makes no representation as to the accuracy or completeness of those data, and such data involve risks and uncertainties and are
subject to change based on various factors.
PG.3
Overview
• 3Q12: Volumes increased from 3Q11 to at or near record levels for both outpatient and inpatient services provided.
• 3Q12: Patient revenue intensity also improved from 3Q11 contributing to increases in both inpatient and outpatient service revenues of 5.7% and 10.9%, respectively.
• Results for 3Q12, 9M12 and 9M11 included extraordinary items related to the sale of investments in KH, ABSPC Group Co., Ltd. (formerly known as “BMC”), and activity within the BIL group. The details of these transactions are presented in the Associated Companies section. Applicable amounts including and excluding these extraordinary items are presented below:
Operational Update
Financial Performance
• BI Bangkok
• Thailand
• International
Updates and Ongoing
Focus
3Q12 growth 9M12 growth
Total revenues 36.3% 22.5%
Total revenues excluding extraordinary items 10.7% 13.5%
EBITDA 13.9% 14.3%
Net profit 159.8% 86.4%
Net profit excluding extraordinary items 13.7% 27.4%
PG.4
Agenda
Strategy
Operational Update
Financial Performance
Associated Companies
PG.5
Strategy
• Campus Expansion
• Doctor Recruitment
Bumrungrad International
Hospital
• Expand in our existing market segment – 2nd Campus
• Expand into a new market segment – 2nd Brand
Metro Bangkok
• Review of selective opportunities International
PG.6
Campus Expansion
• Move off campus into leased office space Back office
• Open 5 floors in Bumrungrad International Clinic
• Expand clinics in Bumrungrad International Hospital Clinics
• Add 44 ICU beds and 61 ward beds in Bumrungrad International Hospital building
• Expand ancillary services Inpatient
• Bought 7,965 sq. meters of land on Petchburi Road.
• Capability to construct 150 – 200 bed hospital
Bumrungrad International – 2nd Campus
• Bought 6,178 sq. meters of land on Sukhumvit Soi 1.
• This land would facilitate the expansion of capacity near the main campus.
New Land for Capacity on Soi 1
• Determine alternatives for employee housing
• Determine alternatives for office space
Acquire Additional Capacity
Est. Capital Investment (Million THB)
Y11 Y12 Y13 Y14 Y15 Y16 Y17 Total
643 2,585 2,807 1,514 487 2,239 114 10,389
PG.7
Realignment of the Corporate Structure
Holds land on Soi 1
Bumrungrad International Ltd.
(“BIL”)
Comprehensive wellness center specializing in preventive care
Vitallife Corporation Ltd.
31.5% 100.0%
Asia Global Research Co., Ltd.
100.0%
Ruenmongkol Co., Ltd.
Clinical research
100.0%
Operates Bumrungrad International Hospital, Bangkok
Bumrungrad Hospital Public Company Limited
(“BHPCL”)
No active operation
• Divestment of all Kasemrad Hospital Group (“KH”) shares on 10 July 2012.
• Purchase of 100% of issued and paid-up share capital of Ruenmongkol Co., Ltd. (“Soi1”) on 24 September 2012.
• Divestment of remaining 51% of Bumrungrad Medical Center Ltd. (“BMC”) on 26 September 2012.
BIL Capital Reductions
Date From (THB) To (THB) BHPCL Received
19 April 2011 3,199.3 million 1,176.0 million 612.6 million
15 March 2012 1,176.0 million 294.0 million 270.6 million
18 May 2012 294.0 million 73.5 million 69.5 million
23 July 2012 73.5 million 18.4 million 17.4 million
25 September 2012 18.4 million 4.6 million 4.3 million
PG.8
Strategy
Operational Update
Financial Performance
Associated Companies
Agenda
PG.9
Overall Volume Trend
Volumes increased in 3Q12 compared with
3Q11 in both Thai and international markets
to at or near record levels for both
outpatient and inpatient services. Inpatient
days rose due to an increase in admissions
and a longer average length of stay.
64
88
77 80 88
70
83 80 88 87
80
89
0
50
100
2Q 3Q 4Q 1Q 2Q 3Q
2010 2011 2012
Admissions
Average Admissions per Day
0.2% 4.9% 9.3%
2,313
2,889 2,759
2,877 3,030
2,460
2,837 2,877 3,030 2,971
3,007 3,085
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2Q 3Q 4Q 1Q 2Q 3Q
2010 2011 2012
Visits
Average Visits per Day
4.9% 4.7% 10.8%
305
359
322 349
377
329 347 349
377 376 372 389
0
50
100
150
200
250
300
350
400
450
2Q 3Q 4Q 1Q 2Q 3Q
2010 2011 2012
14.4%
ADC
Average Daily Census
4.9% 2.2%
24.4%
25.7%
8.4%
4.5%
0.3%
6.7%
1.8%
1.6% 3.2%
PG.10
Revenue per unit of service in 3Q12 reflects a 4.4% effective increase from price adjustments. The remaining amount is revenue intensity or increased consumption for 3Q12:
• OPD revenue intensity per visit
increased 4.7% • IPD revenue intensity per
admission remained relatively stable while average length of stay increased slightly.
Revenue Intensity
5,538 5,465 5,737 5,993 6,012 5,983 5,976 5,993 6,012
6,471 6,534 6,550
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2Q 3Q 4Q 1Q 2Q 3Q
2010 2011 2012
Bt
Revenue per Visit
10.0% 4.3% 8.2% 8.3%
213,041
172,044 181,528
205,814 204,098 217,925
199,321 205,814 204,098
217,246
232,823 212,437
0
50,000
100,000
150,000
200,000
250,000
2Q 3Q 4Q 1Q 2Q 3Q
2010 2011 2012
Bt
Revenue per Admission
18.6% 20.1%
9.0% 3.4%
9.0%
13.1%
8.9%
4.1%
PG.11
Volume Contribution by Nationality
Revenue Contribution by Nationality
International Breakdown
• For 3Q12, International revenue was up 11%
from 3Q11, primarily from revenue intensity.
• Top 5 revenue contribution by Non-Thai
Nationalities (YTD Sep12)
45% 45% 41% 47% 46%
45%
55% 55% 59% 53% 54% 55%
0%
20%
40%
60%
80%
100%
2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
% o
f V
olu
me
International Thais
61%56%61% 60%63%59%
39%44%41% 37% 40%39%
0%
20%
40%
60%
80%
100%
2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
% o
f R
ev
en
ue
International Thais
UAE 9%
Myanmar 6%
Oman 5%
USA 5%
Kuwait 4%
PG.12
Revenue Breakdown
Inpatient vs. Outpatient (% of revenue) Method of Payment (% of revenue)
YTD Sep12
• Revenue contribution for outpatient services increased slightly from historical amounts due to
relatively higher volume and intensity growth.
• 3Q12 Revenue growth:
Outpatient revenue increased by 10.9% y-o-y
Inpatient revenue increased by 5.7% y-o-y
• Self-pay remains the primary method of payment
51% 50% 49% 50% 51% 52%
48%49% 50% 51% 50% 49%
0%
25%
50%
75%
100%
2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
Outpatient
Inpatient
Corporate Contracts - Domestic
10% Corporate
Contracts - Intl 8%
Self-pay 70%
Insurance 12%
PG.13
Agenda
Strategy
Operational Update
Financial Performance
Associated Companies
PG.14
Revenue and Gross Margin Revenue from Hospital Operations (THB mm)
Gross Profit (THB mm)
Gross Profit Margin
2,994
8,511
3,292
9,621
2,000
3,500
5,000
6,500
8,000
9,500
11,000
3rd Quarter YTD Sep
Y2011
Y201210.0%
1,219
3,482
1,323
3,905
0
900
1,800
2,700
3,600
4,500
3rd Quarter YTD Sep
Y2011
Y2012
8.6%
• Cost of hospital operations increased by 10.9% in 3Q12 and 13.7% in 9M12.
• The increase in Cost of hospital operations was slightly
higher than the increase in revenue from hospital operations due to additional staff related expense mostly as a result of the government mandated minimum wage adjustment effective 1 April 2012.
• Gross profit margin of 40.2% in 3Q12 compared to 40.7% in 3Q11. Excluding the impact of the minimum wage adjustment, the Gross profit margin improved year-over-year.
13.0%
12.1%
40.7% 40.9% 40.2%
40.6%
34%
36%
38%
40%
42%
44%
3rd Quarter YTD Sep
Y2011
Y2012
PG.15
EBITDA and EBITDA Margin
EBITDA (THB mm)
EBITDA Margin
769
2,275
876
2,600
0
500
1,000
1,500
2,000
2,500
3,000
3rd Quarter YTD Sep
Y2011Y2012
13.9%
14.3%
• Administrative expenses for 3Q12 were
relatively stable compared with 3Q11 and
increased by 9.0% in 9M12 over prior year.
• The increase in Administrative expenses for
9M12 was mainly due to additional staff
related expense and outsourced services
expense as a result of increased volumes and
the minimum wage adjustment.
• EBITDA advanced 13.9% on quarterly basis
and 14.3% year-to-date September. EBITDA
margin improved to 26.0% in 3Q12 from
25.1% in 3Q11 and 26.4% in 9M12 compared
to 26.1% in 9M11. 25.1%
26.1% 26.0% 26.4%
20%
22%
24%
26%
28%
30%
3rd Quarter YTD Sep
Y2011
Y2012
PG.16
Net Profit (THB mm)
454
1,214
454
1,264 1,180
2,263
516
1,610
0
500
1,000
1,500
2,000
2,500
3rd Quarter YTD Sep 3rd Quarter* YTD Sep*
Y2011 Y2012
Diluted EPS (THB) • As a result of the revenue growth, effective cost management, the statutory corporate income tax rate reduction and a net positive impact of extraordinary items, net profit surged in both periods. Reported net profit margin also increased from 14.5% in 3Q11 to 28.1% in 3Q12 and from 13.8% in 9M11 to 21.0% in 9M12.
• Results for 3Q12, 9M12 and 9M11 included extraordinary items as discussed in the Associated Companies section. Excluding these items, Adjusted Net profit grew by 13.7% in 3Q12 and 27.4% in 9M12, each over the prior year, and Adjusted Net Profit Margin improved from 14.5% in 3Q11 to 15.2% in 3Q12 and from 14.4% in 9M11 to 16.1% in 9M12.
159.8%
Net Profit Margin
Net Profit, Net Profit Margin and Diluted EPS
0.52
1.40
0.52
1.46 1.36
2.61
0.59
1.86
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3rd Quarter YTD Sep 3rd Quarter* YTD Sep*
Y2011 Y2012
159.8%
27.4%
86.4%
13.7%
* Excluding extraordinary items
86.4%
13.7%
27.4%
* Excluding extraordinary items * Excluding extraordinary items
14.5% 13.8% 14.5% 14.4%
28.1%
21.0%
15.2% 16.1%
0%
5%
10%
15%
20%
25%
30%
3rd Quarter YTD Sep 3rd Quarter* YTD Sep*
Y2011 Y2012
PG.17
Leverage
0.6 0.7
0.6
0.4
1.3
(0.2)
(0.50)
0.00
0.50
1.00
1.50
2007 2008 2009 2010 2011YTD
Sep12
0.3 0.3 0.2
0.2
0.6
(0.1)
(0.30)
0.00
0.30
0.60
0.90
2007 2008 2009 2010 2011YTD
Sep12
x Interest Coverage
18.7 18.8
24.8
35.9
14.9 14.4
0
10
20
30
40
2007 2008 2009 2010 2011 YTD Sep12
x
Net Debt to EBITDA
x
Net Debt to Equity
x
*
* Interest expense related to the purchase of common shares of Bangkok Chain Hospital PCL
doing business as Kasemrad Hospital Group to calculate Interest coverage ratio was Baht 111
million based on remaining days after the transaction settled. Assuming this interest expense
was incurred for the full year, interest expense from this transaction would be Baht 140 million
and Interest coverage ratio would be 12.9x
• As a result of the increase in Cash and cash equivalents related to strong operating results and net cash proceeds from sale of investment in Kasemrad Hospital Group, the total debt as at 30 September 2012 was lower than the cash and cash equivalents balance, leading to a net cash balance after considering outstanding debt.
• Interest coverage ratio improved slightly from the Adjusted 12.9x noted above in 2011.
PG.18
Agenda
Strategy
Operational Update
Financial Performance
Associated Companies
PG.19
• KH Acquisition Date: 18 March 2011
• BH Investment % : 24.99%
• KH Divestment Date: 10 July 2012
• BH recognized Share of KH’s profit in 9M12, following the investment in March 2011, is set out in the table below.
* The Company did not recognize any Share of profit from KH in 3Q12, as a result of the sale of all shares in early July 2012
** The Company did not recognize the Share of profit of Baht 3.6 million from Kasemrad Hospital Group in 1Q11, as the acquisition occurred during the last few days of 1Q11
Kasemrad Hospital Group (“KH”) – Share of Profit
(Unit: Thousand Baht) 9M12* 9M11**
Share of profit from KH 111,286 92,238
Depreciation for fixed assets revaluation (4,227) -
Share of profit from KH -net 107,059 92,238
Consulting fee for KH loan - (4,141)
Interest expenses (82,633) (69,483)
Amortization of bond issuance cost (2,001) -
Decrease in corporate income tax 19,006 22,087
Net Share of profit from KH 41,430 40,701
PG.20
• The KH shares were divested on 10 July 2012 given the favorable market valuation which provided an
opportunity for an attractive return and the potential to deploy capital for alternative uses.
• THB 4,564 million in gross proceeds and THB 4,482 million in net proceeds (after transaction costs)
received from the share sale.
• Consolidated pretax gain on sale (Equity Basis) of THB 789.8 million after applicable transaction costs.
• Net Gain on sale (Equity Basis) of approximately THB 586 million (THB 598 million in 3Q12).
• Cumulative Gross ROI was 31.4% & Annualized pretax IRR was 20.5%.
Kasemrad Hospital Group (“KH”) - Divestment
Results from KH-Divestment
Gross Sales Proceeds THB 4,564 million
Net Sales Proceeds THB 4,482 million
Consolidated pretax gain THB 789.8 million
Net Gain on sale -Equity Basis THB 586 million
Cumulative Gross ROI 31.4%
Annualized pretax IRR 20.5%
PG.21
• On 24 September 2012, the Company acquired 100% of Ruenmongkol Co., Ltd. at a
transaction value of Baht 1,045 million (including investment acquisition expenses)
• This investment results in ownership of land on Sukhumvit Soi 1, which will be utilized for
expansion of capacity near the main campus.
Investment in Ruenmongkol Co., Ltd. (“Soi 1”)
• The land covers an area of 1,544.4 square
wah or 6,178 square meters and has a street
frontage of 86 meters.
PG.22
• On 26 September 2012, the Company sold all of its investment in ABSPC Group Co., Ltd.,
(formerly known as “BMC”) resulting in a small gain on the sale of less than Baht 0.1 million.
The Company recognized an associated tax benefit, from the tax loss on sale, of Baht 85
million in 3Q12.
• In 3Q12, the Company recorded the Share of loss from BIL which included the capital gain
taxes and tax advisory services of Baht 14 million associated with the sale of investment in
Asian Hospital Inc., as well as certain wind-down costs of BIL of Baht 5 million. BIL had
applied for Tax Treaty Relief on the sale of Asian Hospital Inc. which was ultimately not
granted in the final phase of the process, triggering capital gain taxes on the transaction.
• 9M11 Net profit included an extraordinary loss of Baht 50 million related to a share
repurchase transaction in the BIL group, recorded in 2Q11, as reported previously.
BMC Divestment and the Share of loss from BIL
PG.23
Q & A