TIDMGHG
RNS Number : 0340Z
Georgia Healthcare Group PLC
15 May 2019
1(st) Quarter Results
www.ghg.com.ge
Name of authorised official of issuer responsible for making
notification:
Ketevan Kalandarishvili, Head of Investor Relations
TABLE OF CONTENTS
-- 1Q 2019 PERFORMANCE highlights
-- CEO Statement
-- Discussion of Group Results
-- Income statement
-- balance sheet
-- Discussion of SeGMENT ResulTS
-- Discussion of Hospitals BUSINESS RESULTS
-- Discussion of Clinics BUSINESS RESULTS
-- Discussion of pharmacy and distribution bUSINESS RESULTS
-- Discussion of MEDICAL INSURANCE BUSINESS RESULTS
-- Discussion of Diagnostics BUSINESS RESULTS
-- selected financial information
-- Annex
-- COMPANY INFORMATION
Forward looking statements
This announcement contains forward-looking statements,
including, but not limited to, statements concerning expectations,
projections, objectives, targets, goals, strategies, future events,
future revenues or performance, capital expenditures, financing
needs, plans or intentions relating to acquisitions, competitive
strengths and weaknesses, plans or goals relating to financial
position and future operations and development. Although Georgia
Healthcare Group PLC believes that the expectations and opinions
reflected in such forward-looking statements are reasonable, no
assurance can be given that such expectations and opinions will
prove to have been correct. By their nature, these forward-looking
statements are subject to a number of known and unknown risks,
uncertainties and contingencies, and actual results and events
could differ materially from those currently being anticipated as
reflected in such statements. Important factors that could cause
actual results to differ materially from those expressed or implied
in forward-looking statements, certain of which are beyond our
control, include, among other things: business integration risk;
compliance risk; recruitment and retention of skilled medical
practitioners risk: clinical risk; concentration of revenue and the
Universal Healthcare Programme; currency and macroeconomic;
information technology and operational risk; regional tensions and
political risk; and other key factors that we have indicated could
adversely affect our business and financial performance, which are
contained elsewhere in this document and in our past and future
filings and reports, including the "Principal Risks and
Uncertainties" included in Georgia Healthcare Group PLC's Annual
Report and Accounts 2018. No part of these results constitutes, or
shall be taken to constitute, an invitation or inducement to invest
in Georgia Healthcare Group PLC or any other entity, and must not
be relied upon in any way in connection with any investment
decision. Georgia Healthcare Group PLC undertakes no obligation to
update any forward-looking statements, whether as a result of new
information, future events or otherwise, except to the extent
legally required. Nothing in this document should be construed as a
profit forecast.
An investor/analyst conference call, organised by GHG, will be
held on Wednesday, 15 May 2019, at 14:00 UK / 15:00 CET / 09:00 U.S
Eastern Time. The duration of the call will be 60 minutes and will
consist of a 15-minute update and a 45-minute Q&A session.
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Georgia Healthcare Group PLC ("GHG" or the "Group" - LSE: GHG
LN), announces the Group's first quarter 2019 consolidated
financial results. Unless otherwise mentioned, comparatives are for
the first quarter of 2018. The results are based on International
Financial Reporting Standards ("IFRS") as adopted in the European
Union ("EU"), are unaudited and extracted from management
accounts.
FINANCIAL PERFORMANCE HIGHLIGHTS
GHG announces today the Group's 1Q19 consolidated results,
reporting 13.3% y-o-y growth in revenues to GEL 235.2 million
(US$87.4 million/GBP 77.9 million) and 90 bps improvement in
adjusted ROIC(1) . The Group posted a profit of GEL 18.3 million
(US$6.8 million/GBP 6.1 million) and earnings per share ("EPS") of
GEL 0.09 (US$0.03 per share/GBP 0.03 per share), both excluding
IFRS 16 impact.
GEL million; unless otherwise Change,
noted 1Q19 1Q18 Y-o-Y
GHG - the leading integrated player in the Georgian
healthcare ecosystem
Revenue, gross 235.2 207.7 13.3%
EBITDA excluding IFRS
16 37.4 31.4 19.1%
Net Profit excluding IFRS
16 18.3 16.0 14.1%
EPS, GEL excluding IFRS
16 0.09 0.08 16.4%
ROIC adjusted (%)(1) 14.4% 13.5% 0.9 ppts
Hospitals business
Revenue, gross 74.8 64.3 16.3%
EBITDA excluding IFRS
16 19.2 17.1 12.1%
EBITDA margin (%) excluding
IFRS 16 25.6% 26.6% -1.0 ppts
Net Profit excluding IFRS
16 5.9 5.9 -0.9%
Clinics business(2)
Revenue, gross 11.1 9.4 17.7%
EBITDA excluding IFRS
16 2.1 1.4 51.0%
EBITDA margin (%) excluding
IFRS 16 18.7% 14.6% 4.1 ppts
Net Profit excluding IFRS
16 (0.2) (0.7) NMF
Pharmacy and distribution
business
Revenue 145.8 126.9 14.9%
Gross profit margin (%) 26.3% 24.7% 1.6 ppts
EBITDA excluding IFRS
16 15.6 12.6 23.1%
EBITDA margin (%) excluding
IFRS 16 10.7% 10.0% 0.7 ppts
Net Profit excluding IFRS
16 12.1 10.8 12.2%
Medical insurance business
Net insurance premiums
earned 17.5 13.3 31.5%
Loss ratio (%) 85.3% 84.3% 0.9 ppts
Combined ratio (%) excluding
IFRS 16 97.9% 100.0% -2.1 ppts
EBITDA excluding IFRS
16 0.6 0.2 175.5%
Net Profit/ (Loss) excluding
IFRS 16 0.5 (0.1) NMF
Diagnostic
Revenue 1.15 0.70 NMF
Gross profit margin (%) 28.0% 26.1% 1.8 ppts
EBITDA excluding IFRS
16 0.05 0.08 NMF
EBITDA margin (%) excluding
IFRS 16 4.2% 11.1% NMF
Net Profit/ (Loss) excluding
IFRS 16 (0.0) 0.0 NMF
1 Return on invested capital ("ROIC") adjusted to exclude newly
launched hospitals and polyclinics that are in roll-out phase
2 Clinics business results now includes community clinics and
polyclinics, new structure explained in more details on page 7
CHIEF EXECUTIVE OFFICER'S STATEMENT
During the first quarter of 2019, the Group made significant
progress in delivering strong earnings growth, improved cash
generation and a significant improvement in the Group's return on
capital invested, together with further progress in delivering the
strategy of each of its businesses.
Our first quarter performance demonstrates the start of our
capturing the benefits of our last few years' investments. We see
double-digit growth opportunities throughout the business over the
medium-term, from leveraging the strength of our existing franchise
without having to make significant further investment capital
expenditure. We will continue to build out our growth
opportunities, in developing medical tourism, and laboratory
diagnostic services, expanding the outpatient clinics and dental
services, adding new pharmacies, and new products such as private
label products and to develop other new opportunities. As a result,
we are strongly positioned to grow the business, improve our
operating cash flows, reduce balance sheet leverage and continue to
achieve improved returns on invested capital.
In the first quarter of 2019, strong organic growth led to a
double-digit revenue increase in every business unit and 13.3%
revenue growth at the Group level. This, combined with a strong
focus on cost management, led to positive operating leverage and
EBITDA growth, excluding the impact of IFRS 16, of 19.1% to GEL
37.4 million. The Group's balance sheet remains robust and, during
the quarter, borrowings started to reduce. Earnings per share,
excluding the impact of IFRS 16, increased by 16.4%, the Group
improved its return on invested capital(3) significantly, from
13.5% to 14.4%, and posted GEL 27.0 million operating cash in 1Q19,
up 6.5% y-o-y, translating into 72.1% EBITDA to cash conversion
ratio.
With effect from 1 January 2019, the Group adopted IFRS 16
"Leases", the most significant impact of which is the
reclassification of rent expense, to interest and depreciation
expense. This has therefore improved reported EBITDA in the quarter
by GEL 5.1 million, to GEL 42.5 million, whilst also increasing
interest expense and depreciation by a similar amount. Whilst, over
time, the net effect of these reclassifications on net profit will
be zero, timing difference mean that in the first quarter of 2019,
net profit was reduced by GEL 0.9 million, and we expect the
full-year impact on net profit to be around GEL 2.5 million. For
comparison purposes, the commentaries in this report exclude the
impact of IFRS 16, however the financial statements show the full
statutory reporting position.
In addition, following the opening of Mega Laboratory ("Mega
Lab") in December 2018 and due to changes in management structure,
we have updated our business unit structure and now report five
separate business units: Hospitals; Clinics, Pharmacy and
Distribution; Medical Insurance and Diagnostics. Further details
are shown on page 7.
Excluding the impact of IFRS 16, the Group delivered a profit of
GEL 18.3 million in the first quarter of 2019, an increase of 14.1%
compared to the first quarter of last year. Strong progress in
terms of both revenues and bed utilisation have been achieved in
our two flagship hospitals, as they continue to ramp up their
utilisation programmes. The roll-out and patient number growth in
our polyclinic network also continues to deliver strong revenue
uplift. Further good levels of sales growth and the completion of
the integration of the pharmacy businesses have resulted in
continued strong EBITDA margins and earnings growth; and the
medical insurance business has returned to profitability.
Revenues totalled GEL 235.2 million for the quarter, an increase
of 13.3%, supported by consistent double-digit revenue growth
across the business units. Group EBITDA was GEL 37.4 million in the
first quarter, a 19.1% increase year-on-year. The EBITDA margin of
the hospitals business stood at 25.6% (27.8% excluding the roll-out
impact), whilst the pharma business EBITDA increased 23.1%
year-on-year to GEL 15.6 million, and its EBITDA margin continues
to exceed expectations, increasing by 70 basis points year-on-year
to 10.7%, an extremely strong performance and substantially in
excess of our targeted "more than 8%" margin.
In January 2019, a new pension system became mandatory in
Georgia, with participation mandatory for employees under the age
of 40, and optional for employees older than 40. Each employee
contributes 2% of their income to an individual retirement account,
which then benefits from further 2% contributions from both the
employer, and (subject to ceilings based on income) the Government.
The group participates in this programme, and the total anticipated
cost to the Group in 2019 is approximately GEL 4.5 million.
Notwithstanding this impact, the group has delivered positive
operating leverage during the first quarter of the year, and
expects to continue doing so.
Hospitals business. Our hospitals business delivered record high
quarterly revenue in 1Q19. We have now completed our major
investments in the development of both Regional Hospital and
Tbilisi Referral Hospital, and we are delivering ongoing
improvements in both bed utilisation and revenues. Both hospitals
are now delivering double-digit EBITDA margins, and we expect these
to continuing increasing as we work over the rest of the year to
build both hospitals towards maturity. Our early recruitment of a
number of specialist elective care medical teams has ensured that
initial utilisation rates have been very strong, and the first
quarter occupancy rate in Regional Hospital was over 35%, up nearly
three percentage points quarter-on-quarter. The bed occupancy rate
of Tbilisi Referral Hospital reached over 52% in the first quarter
of 2019, up nearly six percentage points compared to the fourth
quarter of last year.
Clinics business. Our polyclinic network continues to grow, and
these polyclinics now clearly stand out from their competition as
new, modern facilities that provide a diverse range of high-quality
services in one location. The number of registered patients in
Tbilisi has grown to c.160,000 as of now, and we are targeting to
reach c.200,000 registered patients over the next few months. In
December last year, we entered the Georgian dental market and we
now have dental clinics in eight polyclinics in Tbilisi, and have
dentals offices in other large cities in the regions. Polyclinics
posted a 23% growth in revenue while the business overall
(including community clinics) grew revenue by 18% and increased its
EBITDA margin by four percentage points y-o-y.
Pharmacy and Distribution business. Our pharmacy chain and
distribution business posted record quarterly revenues of GEL 145.8
million, with 14.9% year-on-year growth supported by both strong
organic growth and the further expansion in the number of
pharmacies - which now total 276 pharmacies in major cities. We
plan to further expand this network to over 300 pharmacies over the
next couple of years. The first private label para-pharmacy
products have already been introduced in our pharmacies this month.
We expect these to further enhance our position as market leader in
this segment. In addition, the acquisition of a number of new
corporate accounts supported significant growth in wholesale
revenues. Positive operating leverage of 50 basis points has been
achieved, notwithstanding increased costs following the Georgian
pension system reforms, and this has supported the 33.6% growth in
profit from the business net of FX and IFRS 16 impact, to GEL 12.1
million in the quarter.
Medical insurance business. Our medical insurance business has
made substantial progress over the last 12 months continues to
increase its client base and is now contributing to the
profitability of the Group. Net insurance premiums earned increased
by 31.5%, supported by the acquisition of a single large client,
and the combined ratio improved by 210 basis points to 97.9%. More
importantly, we continue to improve the level of medical insurance
claims retained within the Group and, in the first quarter of 2019,
39.2% of medical expense claims were retained within the Group. We
expect this ratio to continue to increase further over the next few
years.
Diagnostics business. In December 2018, we completed the
construction and opened Mega Lab, the largest diagnostics
laboratory in Georgia and the Caucasus region. The diagnostics
business has already reached break even EBITDA in 1Q19, with costs
of our lab services at Group's healthcare facilities having been
maintained at the same level. This is a significant achievement for
a newly launched business.
The multi-disciplinary laboratory is equipped with the most
modern infrastructure and state-of-the-art equipment and in
addition to basic laboratory tests, the new laboratory allows us to
offer complex tests, some of which have never previously been
available in Georgia and for which, until Mega Lab, blood samples
had to be sent abroad for testing. The launch is in line with our
strategy to invest in and develop new medical services to keep
filling existing service gaps in the country, supporting the
market's continuing development and our service export strategy.
Mega Lab plans to develop a retail network and capitalise on the
scale of our pharmacy and distribution business, and will also work
on additional external contracts, serving healthcare facilities
outside the group.
Capital framework and Dividend Policy. In March 2019, we
completed a review into the Group's capital allocation framework,
after considering the likely capital required over the next few
years to finance our growth and maintain our assets. Accordingly,
management and the Board decided the following:
-- To recommend to shareholders at the 2019 Annual General
Meeting, a final dividend of GEL 0.053 per share, to be paid in
respect of the 2018 financial year. This represents a payout of 20%
of 2018 earnings.
-- To adopt a new dividend policy reflecting our intent that
20%-30% of annual profit attributable to shareholders will be
distributed as dividends, and
-- To target managing the Group balance sheet, on an ongoing
basis, at an average less than 2.0 times net debt to EBITDA from
the end of 2020.
Subject to approval at the 2019 AGM on 22 May 2019, the Group
will pay a dividend for 2018 of GEL 0.053 per share payable in
British Pounds Sterling at the prevailing rate. The payment date is
expected to be 12 July 2019.
* * *
On the back of country's strong economic growth, with real GDP
at 4.7% in 1Q19, supported by external flows and strong FDI, I am
pleased with the Group's progress made during the first quarter.
Each business continues to achieve strong operational performance,
and the Group overall is delivering excellent momentum in its
earnings growth, strong cash generation, balance sheet
deleveraging, and improving return on invested capital
priorities.
(3) ROIC adjusted to exclude newly launched hospitals and
polyclinics that are in roll-out phase
Nikoloz Gamkrelidze,
CEO of Georgia Healthcare Group PLC
DISCUSSION OF GROUP RESULTS
GHG overview
Georgia Healthcare Group PLC is the UK incorporated holding
company of the largest integrated player in the fast-growing
predominantly privately-owned Georgia Healthcare ecosystem of GEL
3.5 billion aggregated value.
Starting from 2019 the Group has updated its business structure
and the healthcare services business was divided into the following
two segments: clinics, which include polyclinics and community
clinics, and hospitals, which include referral hospitals. Now GHG
comprises five business lines: hospitals business, clinics
business, pharmacy and distribution business, medical insurance
business and diagnostics business. Each business line has its own
chief operating officer and supporting back office function,
pursuing significant growth opportunities and concentrating on a
clearer strategy.
GHG is the single largest market participant in the healthcare
services industry in Georgia, accounting for 24.9% of the country's
total hospital bed capacity, as of 31 March 2019. Our healthcare
services business offers the most comprehensive range of inpatient
and outpatient services targeting virtually all segments of the
Georgian market, through its vertically integrated network of
hospitals and clinics. Currently:
-- hospitals business operates 18 referral hospitals with a
total of 2,967 beds, providing secondary or tertiary level
healthcare services, located in Tbilisi and major regional
cities.
-- clinics business operates 35 healthcare facilities, out of which:
- 19 are community clinics with a total of 353 beds, providing
outpatient and basic inpatient healthcare services, located in
regional towns and municipalities.
- 16 are district polyclinics, providing outpatient diagnostic
and treatment services, located in Tbilisi and major regional
cities.
GHG is the largest pharmaceuticals retailer and wholesaler in
Georgia, with a c.30% market share by revenue. Our pharmacy and
distribution business consists of a retail pharmacy chain and a
wholesale business, selling pharmaceuticals and medical supplies to
hospitals and other pharmacies. The pharmacy chain operates under
two separate brand names, Pharmadepot and GPC, with a total of 276
pharmacies, of which 21 are located within our healthcare
facilities. The pharmacy and distribution business is the country's
largest retailer in terms of both revenue and number of bills
issued.
GHG is also the largest provider of medical insurance in
Georgia, with a 26.6% market share based on 4Q18 net insurance
premiums. Our medical insurance business consists of private
medical insurance operations in Georgia. We have a wide
distribution network and offer a variety of medical insurance
products primarily to the Georgian corporate sector and also to
retail clients. We have 229,000 persons insured as at March 2019.
The medical insurance business plays an important role in our
business model, as it is a significant feeder for our polyclinics,
pharmacies and hospitals.
GHG recently opened the largest diagnostics laboratory in
Georgia and the entire Caucasus region. In December 2018, we added
diagnostics business under GHG, an important new business line for
the Group, by opening Mega Laboratory ("Mega Lab"). The
multi-disciplinary laboratory, equipped with latest infrastructure
and state-of-the-art equipment, covers 7,500 square metres.
High-capacity automated systems enable GHG to provide accurate,
high-quality results to the entire population of the country. In
addition to basic laboratory tests, the new laboratory allows us to
offer complex tests for oncology and a molecular lab. Some of the
lab tests offered by Mega Lab have never been available in Georgia
- in the past blood samples had to be sent abroad.
IFRS 16 impact overview. The Group adopted IFRS 16 "Leases" from
1 January 2019. A key change arising from IFRS 16 is that rent
expense is reclassified to interest and depreciation expense. In
1Q19, IFRS 16 impact on Group's EBITDA was GEL 5.1 million, out of
which the pharmacy and distribution business accounted for GEL 4.4
million. The negative impact on the Group's net profit was GEL 0.9,
out of which GEL 0.3 million resulted from foreign exchange loss.
According to the Group's preliminary calculation, IFRS 16 annual
positive impact on the Group's 2019 EBITDA will be around GEL 20
million, of which the pharmacy and distribution business will
account for c.GEL 18 million. The negative impact on the Group's
2019 net profit is estimated around GEL 2.5 million; however, this
negative impact on net profit is just a timing difference that
decreases over time and eventually becomes positive with net effect
of zero. Assets and liabilities also increased by the amount of
discounted cash flows of future rent payments. Below in this
report, to allow for comparisons, the numbers are disclosed with
and excluding IFRS 16.
Income statement, GHG consolidated
GEL thousands; unless otherwise Change,
noted 1Q19 1Q18 Y-o-Y
Revenue, gross 235,211 207,689 13.3%
Corrections & rebates (559) (693) -19.3%
Revenue, net 234,652 206,996 13.4%
Costs of services (158,497) (143,153) 10.7%
Gross profit 76,155 63,843 19.3%
Salaries and other employee
benefits (23,395) (20,439) 14.5%
General and administrative
expenses excluding IFRS 16
impact (14,808) (12,637) 17.2%
Impairment of receivables (1,172) (1,188) -1.3%
Other operating income 629 1,820 -65.4%
EBITDA excluding IFRS 16 37,409 31,399 19.1%
IFRS 16 impact on EBITDA(4) 5,126 - NMF
Depreciation and amortization
excluding IFRS 16 (8,679) (7,715) 12.5%
Depreciation and amortisation (13,177) (7,715) 70.8%
Net interest income (expense)
excluding IFRS 16 (10,362) (8,563) 21.0%
Net interest income (expense) (11,638) (8,563) 35.9%
Net gains/(losses) from foreign
currencies excluding IFRS
16 145 1,899 -92.4%
Net gains/(losses) from foreign
currencies (148) 1,899 NMF
Net non-recurring income/(expense) (155) (1,006) -84.6%
Profit before income tax expense 17,417 16,014 8.8%
Income tax benefit/(expense) (85) (2) NMF
Profit for the period excluding
IFRS 16 18,273 16,012 14.1%
Profit for the period 17,332 16,012 8.2%
Attributable to:
- shareholders of the Company 11,310 10,542 7.3%
- non-controlling interests 6,022 5,470 10.1%
Gross Revenue. Group revenues increased by 13.3% y-o-y, driven
by the double-digit revenue growth across all GHG segments, with
the major contributors being the pharmacy and distribution and
hospitals businesses.
In 1Q19, the Group's revenue diversification across its segments
was: 58% from pharmacy and distribution, 30% from the hospitals, 7%
from medical insurance, 4% from clinics, and the remaining 1% from
the newly added diagnostics business. By payor mix, 53% of the
Group's total revenue was from out-of-pocket payments(5) ; 24% from
UHC payments; and 23% from other sources.
Gross Profit. We continued to deliver increasing gross profit in
1Q19. The Group's gross margin improved by 170 bps y-o-y, to 32.4%
(30.7% in 1Q18). The pharmacy and distribution business contributed
a major part of the growth, benefiting from the Group's significant
scale advantage when negotiating price discounts with
manufacturers. The next contributor to the Group's margin
enhancement was our clinics business, which increased its gross
profit margin as the newly launched polyclinics successfully
progress through their ramp-up phase.
In 1Q19 the mandatory pension reform (effective from January
2019) affected and increased the Group's salary expenses by GEL 1.0
million in total. Despite this, as a result of efficiency and cost
control measures, the cost base on a gross profit as well as on
operating expenses level were well controlled and the Group has
maintained close to zero operating leverage.
EBITDA excluding IFRS 16. The Group delivered strong quarterly
EBITDA growth, up 19.1% y-o-y. The hospitals business was the main
contributor to the Group's 1Q19 EBITDA, contributing 51% in total,
with a 25.6% EBITDA margin. The next largest contributor was the
pharmacy and distribution business, with a 42% share, posting a
strong EBITDA margin of 10.7%. Our clinics and medical insurance
businesses contributed 5% and 2% to the Group's quarterly EBITDA
respectively.
Depreciation and amortisation excluding IFRS 16. Y-o-y increased
depreciation and amortisation expense reflects the Group's recent
investment in sizeable development projects, mainly launching two
flagship hospitals and polyclinics. The depreciation expense of
these investments is fully reflected in our last two quarters
earnings and it remained flat q-o-q.
Net interest expense excluding IFRS 16. The y-o-y increase in
net interest expense was in line with the increased balance of
borrowed funds to finance planned capital expenditure. The q-o-q
decrease in net interest expense, down 5.3%, is mainly a result of
pharmacy and distribution and hospitals businesses' reduced
borrowings balances, down 8.7% and 1.1% respectively. We expect the
Group's leverage to decrease gradually in line with the debt
principal repayment schedule, further reducing interest
expense.
Profit excluding IFRS 16. The pharmacy and distribution business
was the main driver of the 1Q19 Group profit, up 12.2% y-o-y,
contributing GEL 12.1 million, followed by the hospitals business,
contributing GEL 5.9 million. The medical insurance business also
contributed positively to the Group's quarterly profit - GEL 0.5
million.
Selected balance sheet items, GHG consolidated
GEL thousands; unless Change,
otherwise noted 31-Mar-19 31-Dec-18 Q-o-Q
Total assets, of which: 1,331,760 1,240,506 7.4%
Cash and bank deposits 27,596 47,961 -42.5%
Receivables from healthcare
services 115,312 106,841 7.9%
Receivables from sale
of pharmaceuticals 19,571 20,440 -4.3%
Insurance premiums
receivable 53,244 23,643 125.2%
Property and equipment,
of which 767,454 698,037 9.9%
IFRS 16 impact 76,379 -
Goodwill and other
intangible assets 151,561 152,298 -0.5%
Inventory 146,499 146,164 0.2%
Prepayments 17,579 13,064 34.6%
Other assets 32,944 32,058 2.8%
Total liabilities,
of which: 747,390 665,475 12.3%
Borrowed funds 373,745 390,390 -4.3%
Accounts payable 104,001 105,092 -1.0%
Insurance contract
liabilities 50,420 22,544 123.7%
Finance lease liabilities 78,145(6) 8,676 NMF
Other liabilities 141,079 138,773 1.7%
Total shareholders'
equity attributable
to: 584,370 575,031 1.6%
Shareholders of the
Company 516,252 508,194 1.6%
Non-controlling interest 68,118 66,837 1.9%
-- Our balance sheet remained largely flat q-o-q, apart from
IFRS 16 effect which increased our property and equipment and
finance lease liabilities balances.
-- The majority of medical insurance contracts mature and renew
in January every year, causing the insurance premium receivable as
well as insurance contract liabilities balances to increase in 1Q19
compared to year end. From February 2019 our medical insurance
business has added a significant new corporate client, which has
also contributed to q-o-q growth in insurance premium receivable
and insurance contract liabilities balances.
4 Represents IFRS 16 impact on General and administrative
expenses
5 Includes: hospitals and clinics out-of-pocket revenue,
pharmacy and distribution, medical insurance and diagnostics
businesses' revenue from retail
6 Out of which GEL 69.5 million accounts for IFRS 16 impact
DISCUSSION OF SEGMENT RESULTS
The segment results discussion is presented for hospitals,
clinics, pharmacy and distribution, medical insurance and
diagnostics businesses.
Discussion of Hospitals Business Results
1Q19 operating highlights:
-- Following the split of our healthcare services business, our
management has revised the classification of our hospitals and
clinics. Three of our clinics have become sufficiently large enough
to merit hospitals classification and one of our hospitals was
classified as a clinic due to the nature of services offered. For
comparison purposes, we will discuss our hospitals and clinics
results for both 1Q19 and 1Q18 according to the new structure.
-- Our adjusted hospital bed occupancy rate(7) was at 67.2% in
1Q19 (65.1% in 1Q18).
-- The average length of stay at hospitals(8) was 5.4 days in
1Q19 (5.5 days in 1Q18).
Income Statement, Hospitals business
GEL thousands; unless otherwise Change,
noted 1Q19 1Q18 Y-o-Y
Hospitals revenue, gross 74,774 64,290 16.3%
Corrections & rebates (462) (595) -22.4%
Hospitals revenue, net 74,312 63,695 16.7%
Costs of hospitals business (43,021) (36,482) 17.9%
Gross profit 31,291 27,213 15.0%
Salaries and other employee
benefits (7,952) (6,831) 16.4%
General and administrative
expenses excluding IFRS 16 (3,427) (3,328) 3.0%
Impairment of receivables (1,137) (1,186) -4.1%
Other operating income 387 1,232 -68.6%
EBITDA excluding IFRS 16 19,162 17,100 12.1%
EBITDA margin excluding IFRS
16 25.6% 26.6%
IFRS 16 impact on EBITDA9 179 - NMF
Depreciation and amortization
excluding IFRS 16 (6,516) (5,571) 17.0%
Depreciation and amortisation (6,679) (5,571) 19.9%
Net interest income (expense)
excluding IFRS 16 (6,582) (4,712) 39.7%
Net interest income (expense) (6,613) (4,712) 40.3%
Net gains/(losses) from foreign
currencies excluding IFRS
16 (93) (21) NMF
Net gains/(losses) from foreign
currencies (115) (21) NMF
Net non-recurring income/(expense) (104) (871) -88.1%
Profit before income tax
expense 5,830 5,925 -1.6%
Income tax benefit/(expense) - (2) NMF
Profit for the period excluding
IFRS 16 5,867 5,923 -0.9%
Profit for the period 5,830 5,923 -1.6%
Revenue, hospitals
Our hospitals business posted strong double-digit y-o-y revenue
growth, mainly driven by successful ramp-up of our newly launched
hospitals. Strong growth in occupancy rate in existing hospitals,
up 210 bps y-o-y, is mainly attributable to unusual high flu
epidemic in the country, in the beginning of 2019.
Progress of our newly opened hospitals
Tbilisi Referral Hospital - opened in April 2017 with 220 newly
renovated beds. In December 2017 additional capacity - 112 beds -
was added and the hospital was fully launched. After gradually
adding new services, the hospital's occupancy rate reached 52.2% in
1Q19 (up 570 bps q-o-q), while posting revenue of GEL 6.4 million
(up 8.9% q-o-q). The hospital also started to post a double-digit
EBITDA margin in the first quarter of 2019.
Regional Hospital - opened in March 2018 with 306 newly
renovated beds. Regional hospital continues its successful ramp up
phase, exceeding our initial expectations. The occupancy rate in
1Q19 reached 35.6% (up 290 bps q-o-q) and revenues totalled GEL 8.9
million (up 7.7% q-o-q). Positioned as hospital of choice in the
country, in line with our initial plan, c.60% of Regional
Hospital's revenue comes from elective care services and 41.2% of
revenue is paid out-of-pocket. The Regional Hospital also started
to post a double-digit EBITDA margin in the first quarter of
2019.
Revenue by sources of payment
(GEL thousands, unless Change,
otherwise noted) 1Q19 1Q18 Y-o-Y
Hospitals revenue, net 74,312 63,695 16.7%
Government-funded healthcare
programmes 51,570 42,863 20.3%
Out-of-pocket payments
by patients 17,696 16,275 8.7%
Private medical insurance
companies, of which 5,046 4,557 10.7%
GHG medical insurance 2,509 1,706 47.1%
All payment sources contributed to our revenue growth, while the
Government-funded healthcare programme remains the main
contributor, accounting 69.4%(10) in total revenue from hospitals
business.
Gross profit, hospitals
Cost of hospitals as Change,
% of revenue 1Q19 1Q18 Y-o-Y
Direct salary rate 33.8% 34.1% * 0.3 ppts
0.8
Materials rate 17.4% 16.6% ppts
Gross margin 41.8% 42.3% * 0.5 ppts
The recent launches of hospitals that remain in their roll-out
phase naturally increased our cost base, which slightly exceeded
the hospitals revenue growth rate. Despite the new pension reform
(described on page 5 above in more detail) which increased our cost
of salaries and other employee benefits by c.2%, as a result of
focused efficiency initiatives the direct salary rate was down by
30 bps y-o-y. The increase in the materials rate reflects the roll
out of the new hospitals. Excluding the effect of newly launched
hospitals, the materials rate remained well-controlled and stood at
15.6% in 1Q19 (16.4% in 1Q18). The cost of providers was affected
by adding diagnostics business and centralising hospital laboratory
services into Mega Lab, discussed below in the diagnostics segment
overview.
As a result, the hospitals gross margin stood at 41.8% in 1Q19,
representing slight decrease of 50 bps y-o-y, due to the ramp-up
phase of the new hospitals.
Operating expenses, hospitals
Growth in salaries and other employee benefits expenses was in
line with the growth in respective revenues. Cost control measures
were able to offset the effect of the new pension reform, which
accounted for a GEL 0.2 million increase. We also managed to
maintain general and administrative expenses (excluding IFRS 16
impact) at a favourable level, increasing only 3.0% y-o-y.
The decrease in other operating income reflects the transfer of
hospitals centralised medicine procurement entity to the GHG
pharmacy and distribution business in 2019. Besides, in 1Q18 the
Group generated higher gain from sale of PPE.
EBITDA excluding IFRS 16, hospitals
The healthy increase in our 1Q19 EBITDA reflects the
contributions of our two new flagship hospitals, increased demand
for current services at our existing facilities and implemented
efficiency initiatives. Y-o-y EBITDA margin, however, was down 100
bps and stood at 25.6%, mainly due to the new pension reform, that
added GEL 0.7 million in salary expense and translated in 90 bps
reduction in EBITDA margin, and the decrease in other operating
income explained above.
Excluding the dilutive effect of roll-outs, despite the high
seasonal utility costs and the new pension reform, the hospitals
business posted strong EBITDA margin of 27.8% in 1Q19.
Profit, hospitals
Since the launch of Regional Hospital (March 2018) and Mega Lab
(December 2018), the accounting impact of the Group's investments
in new hospitals on depreciation and amortisation expense is now
fully reflected in our last two quarters results. Thus, q-o-q
depreciation expense (excluding IFRS 16 impact) remained
stable.
The slight decrease in q-o-q net interest expense (excluding
IFRS 16 impact), reflects the decreased balance of borrowings
according to their repayments schedule and is expected to decline
further over the next few years, as we reduce our debt balance.
7 Adjusted to exclude the Tbilisi Referral Hospital and Regional
Hospital; the calculation also excludes emergency beds
8 The calculation excludes emergency beds
9 Represents IFRS 16 impact on General and administrative
expenses
10 Government funded healthcare programmes revenue share in
total revenues from hospitals is higher compared to the same share
in revenues from healthcare services that we used to report (which
now, due to the split of hospitals and clinics results, are
reported separately). This is because UHC mostly covers inpatient
services, while the revenue share from government in our clinics
business is lower, at 55.5%, due to the limited coverage of
outpatient services from UHC that our polyclinics provide.
Discussion of Clinics Business Results(11)
1Q18 operating highlights:
-- In December 2018 we entered into the Georgian dental market
by launching dental clinics in the Group's polyclinics. Currently 8
of our polyclinics, located in Tbilisi and in other large cities,
house dental cabinets.
-- The number of registered patients in Tbilisi polyclinics has
now reached c.160,000 (compared to c.145,000 in December 2018). We
aim to further grow our polyclinic business both organically and
through further acquisitions and reach c.200,000 registered
patients over the next few months.
Income Statement, Clinics Business
GEL thousands; unless otherwise Change,
noted 1Q19 1Q18 Y-o-Y
Clinics revenue, gross 11,107 9,434 17.7%
Corrections & rebates (97) (98) -1.0%
Clinics revenue, net 11,010 9,336 17.9%
Costs of clinics business (6,244) (5,423) 15.1%
Gross profit 4,766 3,913 21.8%
Salaries and other employee
benefits (1,756) (1,643) 6.9%
General and administrative
expenses excluding IFRS 16 (1,082) (902) 20.0%
Impairment of receivables (75) (16) NMF
Other operating income 223 23 NMF
EBITDA excluding IFRS 16 2,076 1,375 51.0%
EBITDA margin excluding IFRS
16 18.7% 14.6%
IFRS 16 impact on EBITDA(12) 454 - NMF
Depreciation and amortization
excluding IFRS 16 (1,228) (1,349) -9.0%
Depreciation and amortisation (1,626) (1,349) 20.5%
Net interest income (expense)
excluding IFRS 16 (957) (980) -2.3%
Net interest income (expense) (1,086) (980) 10.8%
Net gains/(losses) from foreign
currencies excluding IFRS
16 (27) (4) NMF
Net gains/(losses) from foreign
currencies (61) (4) NMF
Net non-recurring income/(expense) (52) 286 NMF
Profit before income tax
expense (295) (672) -56.1%
Income tax benefit/(expense) - (2) NMF
Profit for the period excluding
IFRS 16 (188) (674) -72.1%
Profit for the period (295) (674) -56.2%
Revenue, clinics
Our clinics business also posted double-digit revenue growth
driven by both, the polyclinics as well as community clinics.
Revenue by types of clinics
(GEL thousands, unless Change,
otherwise noted) 1Q19 1Q18 Y-o-Y
Clinics revenue,
net 11,010 9,336 17.9%
Polyclinics 5,562 4,507 23.4%
Community 5,448 4,829 12.8%
In 1Q19, 51% of the clinics' revenue came from polyclinics and
49% from community clinics.
The growth in revenue from polyclinics was driven by our
expansion strategy and increased number of registered patients. We
added dental clinics in our polyclinics and continue to consolidate
our position as the largest player in the highly fragmented
outpatient market in Georgia. Most importantly, we continue to
increase the number of registered patients in our Tbilisi
polyclinics, that has now reached c.160,000 (up from c.145,000 in
4Q18 and c.108,000 in 1Q18), further supporting polyclinics revenue
growth.
The y-o-y increase in revenue from community clinics, which play
a feeder role for the referral hospitals, was fully organic.
Revenue by sources of payment in clinics
(GEL thousands, unless Change,
otherwise noted) 1Q19 1Q18 Y-o-Y
Healthcare services
revenue, net 11,010 9,336 17.9%
Government-funded healthcare
programmes 6,106 5,286 15.5%
Out-of-pocket payments
by patients 3,136 2,762 13.5%
Private medical insurance
companies, of which 1,768 1,288 37.3%
GHG medical insurance 1,589 1,127 41.0%
The main contributor to clinics revenue growth was
Government-funded healthcare programmes, accounting for a 55% share
in total revenue from clinics. The strong growth in clinics revenue
from private insurance companies is mainly supported by the
increased number of GHG insured clients, who prefer to use
polyclinics, due to the different incentives such as direct
settlement of claims, and quality of care.
Gross profit, clinics
Cost of clinics as Change,
% of revenue 1Q19 1Q18 Y-o-Y
Direct salary rate 34.6% 36.5% * 1.9 ppts
Materials rate 6.1% 6.4% * 0.3 ppts
1.4
Gross margin 42.9% 41.5% ppts
Despite the new pension reform, the direct salary rate was down
190 bps in 1Q19, y-o-y. The y-o-y decrease in cost of materials
rate is partially attributable to redirecting the laboratory tests
to Mega Lab, eliminating cost of reagents while increasing the cost
of medical service providers for the same period. Well managed cost
of clinics translated into an increased gross margin, up 140 bps
y-o-y.
Operating expenses, clinics
The clinics business posted strong y-o-y positive operating
leverage of 15.8 ppts y-o-y. Our focus on efficiency initiatives in
the clinics business resulted in only moderate growth in salaries
and other employee benefits, favourably lagging behind revenue
growth. The increase in general and administrative expenses
(excluding IFRS 16 impact) mainly relates to marketing campaigns to
attract and increase the base of registered customers at our
Tbilisi polyclinics.
EBITDA excluding IFRS 16, clinics
Increased revenue and well controlled cost base translated into
51.0% increase in 1Q19 y-o-y EBITDA, while posting 18.7% EBITDA
margin, up 410 pbs y-o-y.
Polyclinics EBITDA margin continues to increase gradually as a
number of the polyclinics made progress towards their run rate
potential and the base of registered patients continues to
increase. The polyclinics' EBITDA margin rose to 14.6% in 1Q19, up
110 bps y-o-y.
Profit, clinics
As the number of polyclinics still remain in the roll-out phase
the clinics contributed negatively to the Group's profit. Currently
the main priority of the business remains the polyclinics chain
expansion and increasing the base of registered customers, as our
polyclinics represent a first point of customer interaction for our
overall business, bringing additional referrals to our hospitals
and pharmacies. Combined with the newly launched dental clinics, we
believe that the polyclinics business will become one of the
largest sources of future growth, while we expect only moderate
growth from the community clinics.
11 Under the Group's new structure, the clinics business results
now includes community clinics and polyclinics, explained in more
details on page 7
(12) Represents IFRS 16 impact on General and administrative
expenses
Discussion of Pharmacy and Distribution Business Results
1Q19 operating highlights:
-- Retail customer interactions per month was c.2.4 (c.2.2 in
1Q18)
-- Average bill size was GEL 13.7 (GEL 13.9 in 1Q18)
-- c.0.7 million loyalty card members as at 31 March 2019
Income Statement, pharmacy and distribution business
GEL thousands; unless otherwise Change,
noted 1Q19 1Q18 Y-o-Y
Pharmacy and distribution
revenue 145,779 126,868 14.9%
Costs of Pharmacy and distribution (107,481) (95,550) 12.5%
Gross profit 38,298 31,318 22.3%
Salaries and other employee
benefits (12,664) (11,194) 13.1%
General and administrative
expenses excluding IFRS 16 (9,909) (8,250) 20.1%
Impairment of receivables (58) (20) 190.0%
Other operating income (106) 790 NMF
EBITDA excluding IFRS 16 15,561 12,644 23.1%
EBITDA margin excluding IFRS
16 10.7% 10.0%
IFRS 16 impact on EBITDA(13) 4,402 - NMF
Depreciation and amortization
excluding IFRS 16 (688) (548) 25.5%
Depreciation and amortisation (4,538) (548) NMF
Net interest income (expense)
excluding IFRS 16 (2,949) (2,757) 7.0%
Net interest income (expense) (4,052) (2,757) 47.0%
Net gains/(losses) from foreign
currencies excluding IFRS
16 206 1,886 -89.1%
Net gains/(losses) from foreign
currencies (27) 1,886 NMF
Net non-recurring income/(expense) 6 (411) NMF
Profit before income tax
expense 11,352 10,814 5.0%
Income tax benefit/(expense) - - -
Profit for the period excluding
IFRS 16 12,136 10,814 12.2%
Profit for the period 11,352 10,814 5.0%
Revenue, pharmacy and distribution
We enjoyed strong, 14.9% revenue growth in our retail and
distribution businesses as shown in the table below.
Revenue by types, pharmacy and distribution
(GEL thousands, unless otherwise Change,
noted) 1Q19 1Q18 Y-o-Y
Pharmacy and distribution revenue 145,779 126,868 14.9%
Revenue from Retail 103,673 95,080 9.0%
Revenue from Distribution 42,106 31,788 32.5%
1.6
Gross profit Margin 26.3% 24.7% ppts
The increase in y-o-y revenues from retail is attributable to
recent expansion and organic sales growth in the business. Over the
last 12 months we have added 20 new pharmacies to our chain and, by
the end of 1Q19, the number of pharmacies reached 276. The average
bill size was down by 1.7% y-o-y due to different promotions and
various discount activities designed to share our procurement
synergies with customers by providing affordable pricing on key
products. The price discounts translated into increased number of
bills issued in our pharmacies (up 6.9% y-o-y), the positive effect
of which was reflected in the business' y-o-y same-store growth -
4.3% in 1Q19. The share of para-pharmacy sales in retail revenue
stood at 29.3% in 1Q19 (28.8% in 1Q18).
The pharmacy and distribution business continues to make strong
progress in growing wholesale revenue by signing new corporate
accounts. Apart from new clients, the distribution revenue growth
relates to the transfer in 2019 of our hospitals centralised
medicine procurement entity to the GHG pharmacy and distribution
business wholesale segment.
Gross profit, pharmacy and distribution
Gross profit margin in the pharmacy and distribution business
improved significantly, up 160 bps in 1Q19 y-o-y as the business
continues to extract procurement synergies and to negotiate better
prices with suppliers. The increase was mainly driven by the
increased margin on non-medication categories (personal care,
beauty and other para-pharmacy products), total sales of which were
GEL 32.4 million in 1Q19 with 31.6% gross profit margin, compared
to GEL 28.3 million in 1Q18 with 27.8% gross profit margin.
Our gross profit margins also benefited from the increased sales
of private label products. Currently, 37 private label medicines
are presented in our pharmacies, with annualised revenue
contribution of c.GEL 5 million. This month, private label personal
care products were also introduced in our pharmacies under the
brand name "Attirance".
Operating expenses, pharmacy and distribution
The business posted y-o-y positive operating leverage of 50 bps
in 1Q19. Salaries and other employee benefits, despite the pension
reform, favourably lagged behind the same period revenue growth.
Apart from business expansion, the y-o-y increase in general and
administrative expenses (excluding IFRS 16 impact) in 1Q19 is
attributable to the marketing activities and promotions discussed
above.
EBITDA and profit, pharmacy and distribution
Our 1Q19 EBITDA margin at 10.7% continues to substantially
exceed our "more than 8%" medium term target.
In 1Q19 interest expense included GEL 0.2 million on the mark to
market of the Pharmadepot (the pharmacy and distribution brand
acquired in 2017) acquisition holdback (GEL 0.3 million in 1Q18)
which is a non-cash expense. The q-o-q decrease in interest expense
(excluding IFRS 16 impact), down 12.6%, is due to the reduced
balance of borrowings, down 8.7% for the same period. Consequently,
the pharmacy and distribution business profit (excluding IFRS 16
impact) was up 12.2% y-o-y, while the same number net of foreign
currency gain/losses was up 33.6% y-o-y.
(13) Represents IFRS 16 impact on General and administrative
expenses
Discussion of Medical Insurance Business Results
1Q19 operating highlights:
-- As at 31 December 2018, business market share based on net
insurance premium revenue was 26.6%. In 2019, we became the largest
medical insurer in Georgia with 229,000 insured in 1Q19 (158,900 in
1Q18; 157,500 in 4Q18) with market share over 30%.
-- Our insurance renewal rate was 74.4% in 1Q19 (70.6% in
1Q18).
Income Statement, medical insurance business
GEL thousands; unless otherwise Change,
noted 1Q19 1Q18 Y-o-Y
Net insurance premiums earned 17,493 13,302 31.5%
Cost of insurance services (15,683) (11,894) 31.9%
Gross profit 1,810 1,408 28.6%
Salaries and other employee
benefits (917) (783) 17.1%
General and administrative
expenses excluding IFRS 16 (440) (350) 25.7%
Impairment of receivables (103) (98) 5.1%
Other operating income 212 27 NMF
EBITDA excluding IFRS 16 562 204 175.5%
EBITDA margin excluding IFRS
16 3.2% 1.5%
IFRS 16 impact on EBITDA(14) 85 - NMF
Depreciation and amortisation
excluding IFRS 16 (189) (204) -7.4%
Depreciation and amortisation (269) (204) 31.9%
Net interest income/ (expense)
excluding IFRS 16 127 (114) NMF
Net interest income/ (expense) 113 (114) NMF
Net gains/(losses) from foreign
currencies excluding IFRS
16 63 38 65.8%
Net gains/(losses) from foreign
currencies 59 38 55.3%
Net non-recurring income/(expense) - - 0.0%
Profit before income tax
expense 550 (76) NMF
Income tax benefit/(expense) (85) - NMF
Profit / (Loss) for the period
excluding IFRS 16 478 (76) NMF
Profit / (Loss) for the period 465 (76) NMF
Revenue, medical insurance
Our medical insurance business also posted strong y-o-y
double-digit revenue growth, driven by the increased number of new
corporate clients. The business started to benefit from the Group's
scale that gives us an advantage to offer more competitive prices
on the market. Out of new clients, the largest new contract is with
the Ministry of Defences ("MOD"), acquired through tender process
starting from February 2019. Apart from business growth, the
increased number of insured further increases our medical insurance
claims retention rate within the Group -which, apart from
expansion, is the business' main priority.
Gross profit, medical insurance
In 1Q19 the loss ratio was 85.3%, slightly up y-o-y due to the
addition of big clients, such as MOD, having slightly higher loss
ratio than the existing contracts.
Our insurance business expansion has significantly improved
claims retention rates within the Group, as the business plays a
feeder role in originating and directing patients to our healthcare
facilities, mainly to polyclinics and to pharmacies. In 1Q19, our
medical insurance claims expense was GEL 14.9 million, of which GEL
6.5 million (44.2% of the total) was inpatient, GEL 5.8 million
(38.6% of total) was outpatient and GEL 2.6 million (17.2% of
total) was accounted for by drugs.
Change,
1Q19 1Q18 Y-o-Y
Total claims retained 1.0
within the Group 39.2% 38.2% ppts
Total claims retained 1.7
in Polyclinics 40.4% 38.7% ppts
Claims retention rates
Due to the medical insurance business' increased client base
(reaching 229,000 insured as of March 2019) and new flagship
hospital launches in Tbilisi, where our medical insurance business
has the highest concentration of its insured clients, more of our
medical insurance customers will be utilising our inpatient
services. At the same time, with our polyclinics expansion
strategy, we expect the retention rate to improve further in the
future, on a larger base, providing a significant revenue boost for
our healthcare services business. Our facilities are increasingly
favoured by customers over competitor facilities due to the quality
and convenience of our service, access to one-stop-shop style
polyclinics and the ease of claim reimbursement procedures.
Operating expenses, medical insurance
Operating expenses favourably lagged behind revenue growth,
translating into strong positive operating leverage of 24.9 ppts in
1Q19.
Last year, our medical insurance business began participating in
the Compulsory Motor Third Party Liability Insurance Programme,
effective in the country from 1 March 2018. The profit from this is
shown in other operating income.
As a result, the expense ratio (excluding IFRS 16) impact was
down 310 bps at 12.6% (15.7% in 1Q18) in 1Q19 y-o-y, while combined
ratio (excluding IFRS 16 impact) improved by 210 bps to 97.9%
(100.0% in 1Q18) for the same period.
EBITDA and net profit, medical insurance
Due to efficient allocation of cash resources, our medical
insurance business posted net interest income in 1Q19 and
consequently contributed positively to the Group's EBITDA and
profit, by GEL 0.6 million and GEL 0.5 million, respectively.
(14) Represents IFRS 16 impact on General and administrative
expenses
Discussion of Diagnostics Business Results
Overview, diagnostics
In December 2018, we completed construction and opened Mega Lab,
the largest diagnostics laboratory in Georgia and the entire
Caucasus region. The multi-disciplinary laboratory is equipped with
the most modern infrastructure and state-of-the-art equipment and
in addition to basic laboratory tests, the new laboratory allows us
to offer complex tests for oncology and molecular lab, some of
which have never previously been available in Georgia and for which
blood samples used to be sent abroad. The launch is in line with
our strategy to invest in and develop new medical services to keep
filling existing service gaps in the country, supporting the
market's continuing development and our service export
strategy.
Mega Lab is an important, separate, business line for the Group,
the results of which are shown below in detail. Currently the
process of centralising Group's internal lab demand - through
collecting samples from the Group's hospitals and polyclinics
throughout Georgia - is ongoing and will be completed by September
of this year. Test results are distributed electronically to each
hospital and polyclinic within the Group through the internal
Laboratory Information Management System ("LIMS"), enabling us to
be more efficient and provide a reliable service to our patients.
Apart from serving the Group facilities, which cover only
one-fourth of the laboratory's capacity, Mega Lab plans to develop
a retail network and capitalise on our pharmacy and distribution
business' scale - being the largest retailer in the country - the
concept of which is under development. The Mega Lab will also work
on additional external contracts, serving healthcare facilities
outside the Group.
Before opening Mega Lab, most of the Group's healthcare
facilities had their own laboratory units and the Group owned one
smaller scale lab facility (Patgeo, acquired in 2016). The results
below for 1Q18 shows the numbers for Patgeo, which after opening
Mega Lab was fully consolidated into the diagnostics business 1Q19
results. The Group's healthcare facilities cost base for lab
services remained the same with the opening of Mega Lab. Costs
previously reflected as salaries and materials (mainly reagents)
have simply been shifted to cost of providers.
1Q19 operating highlights:
-- Number of patients served - c.67,000
-- Number of tests performed - c.172,000
-- Average number of tests per patient 2.6
Income Statement, Diagnostics
GEL thousands; unless otherwise Change,
noted 1Q19 1Q18 Y-o-Y
Diagnostics revenue 1,154 696 NMF
Costs of diagnostics (831) (514) 61.7%
Gross profit 323 182 NMF
Salaries and other employee
benefits (234) (45) NMF
General and administrative
expenses excluding IFRS 16 (84) (56) 50.0%
Impairment of receivables (4) - NMF
Other operating income 47 (4) NMF
EBITDA excluding IFRS 16 48 77 -37.7%
EBITDA margin excluding IFRS
16 4.2% 11.1%
IFRS 16 impact on EBITDA(15) 6 - NMF
Depreciation and amortisation
excluding IFRS 16 (59) (44) 34.1%
Depreciation and amortisation (65) (44) 47.7%
Net interest income/ (expense)
excluding IFRS 16 - - 0.0%
Net interest income (expense) - - 0.0%
Net gains/(losses) from foreign
currencies excluding IFRS
16 (6) - NMF
Net gains/(losses) from foreign (6) - NMF
currencies
Net non-recurring income/(expense) (5) (11) -54.5%
Profit before income tax expense (22) 22 NMF
Income tax benefit/(expense) - - -
Profit for the period excluding
IFRS 16 (22) 22 NMF
Profit for the period (22) 22 NMF
Revenue by types, diagnostics
(GEL thousands, unless Change,
otherwise noted) 1Q19 1Q18 Y-o-Y
Diagnostics revenue 1,154 280 NMF
Contracts 1,109 280 NMF
Walk-in 45 - NMF
In 1Q19 major part of our diagnostics business revenue came from
contracts, as mentioned above mainly from the Group's hospitals and
clinics, by consolidating the demand for planned laboratory tests
in Mega Lab. The 4% of revenue from walk-in patients represents
retail revenue which we plan to increase as the business develops
retail blood collection points.
In the first quarter of its operations the business reached
break even EBITDA, a significant achievement for a newly launched
segment. The cost base for lab tests are the same as it was for our
previously operated separate lab units in our healthcare
facilities, while the newly added diagnostics business already
posts a positive margin due to the reduced cost of tests as a
result of consolidation.
(15) Represents IFRS 16 impact on General and administrative
expenses
SELECTED FINANCIAL INFORMATION
Income Statement, Clinics Medical insurance
Quarterly Hospitals Pharmacy and distribution
GEL thousands,
unless Change, Change, Change, Change, Change, Change, Change, Change,
otherwise noted 1Q19 1Q18 Y-o-Y 4Q18 Q-o-Q 1Q19 1Q18 Y-o-Y 4Q18 Q-o-Q 1Q19 1Q18 Y-o-Y 4Q18 Q-o-Q 1Q19 1Q18 Y-o-Y 4Q18 Q-o-Q
Revenue, gross 74,774 64,290 16.3% 72,046 3.8% 11,107 9,434 17.7% 10,026 10.8% 145,779 126,868 14.9% 141,046 3.4% 17,493 13,302 31.5% 13,870 26.1%
Corrections &
rebates (462) (595) -22.4% (1,035) -55.4% (97) (98) -1.0% (123) -21.1% - - - - - - - - - -
Revenue, net 74,312 63,695 16.7% 71,011 4.6% 11,010 9,336 17.9% 9,903 11.2% 145,779 126,868 14.9% 141,046 3.4% 17,493 13,302 31.5% 13,870 26.1%
Costs of services (43,021) (36,482) 17.9% (41,718) 3.1% (6,244) (5,423) 15.1% (5,522) 13.1% (107,481) (95,550) 12.5% (103,786) 3.6% (15,683) (11,894) 31.9% (11,628) 34.9%
Cost of salaries
and other
employee
benefits (25,241) (21,952) 15.0% (25,248) 0.0% (3,843) (3,448) 11.5% (3,682) 4.4% - - - - - - - - - -
Cost of materials
and supplies (13,019) (10,652) 22.2% (12,205) 6.7% (677) (601) 12.6% (533) 27.0% - - - - - - - - - -
Cost of medical
service
providers (1,012) (837) 20.9% (1,023) -1.1% (1,064) (795) 33.8% (932) 14.2% - - - - - - - - - -
Cost of utilities
and other (3,749) (3,041) 23.3% (3,242) 15.6% (660) (579) 14.0% (375) 76.0% - - - - - - - - - -
Net insurance
claims
incurred - - - - - - - - - - - - - - - (14,914) (11,218) 32.9% (10,843) 37.5%
Agents, brokers
and
employee
commissions - - - - - - - - - - - - - - - (769) (676) 13.8% (785) -2.0%
Cost of pharma -
wholesale - - - - - - - - - - (34,117) (26,097) 30.7% (30,382) 12.3% - - - - -
Cost of pharma -
retail - - - - - - - - - - (73,364) (69,453) 5.6% (73,404) -0.1% - - - - -
Gross profit 31,291 27,213 15.0% 29,293 6.8% 4,766 3,913 21.8% 4,381 8.8% 38,298 31,318 22.3% 37,260 2.8% 1,810 1,408 28.6% 2,242 -19.3%
Salaries and other
employee benefits (7,952) (6,831) 16.4% (7,148) 11.2% (1,756) (1,643) 6.9% (1,706) 2.9% (12,664) (11,194) 13.1% (12,198) 3.8% (917) (783) 17.1% (1,213) -24.4%
General and
administrative
expenses (3,427) (3,328) 3.0% (3,557) -3.7% (1,082) (902) 20.0% (981) 10.3% (9,909) (8,250) 20.1% (9,765) 1.5% (440) (350) 25.7% (435) 1.1%
Impairment of
receivables (1,137) (1,186) -4.1% (956) 18.9% (75) (16) NMF (79) -5.1% (58) (20) 190.0% 27 NMF (103) (98) 5.1% (103) 0.0%
Other operating
income 387 1,232 -68.6% 1,412 -72.6% 223 23 869.6% 304 -26.6% (106) 790 NMF (88) 20.5% 212 27 NMF 158 34.2%
EBITDA excluding
IFRS 16 19,162 17,100 12.1% 19,044 0.6% 2,076 1,375 51.0% 1,919 8.2% 15,561 12,644 23.1% 15,236 2.1% 562 204 175.5% 649 -13.4%
EBITDA margin
excluding
IFRS 16 25.6% 26.6% 26.4% 18.7% 14.6% 19.1% 10.7% 10.0% 10.8% 3.2% 1.5% 4.7%
IFRS 16 impact on
EBITDA(16) 179 - NMF - NMF 454 - NMF - NMF 4,402 - NMF - NMF 85 - NMF - NMF
EBITDA as per
financial
statements 19,341 17,100 13.1% 19,044 1.6% 2,530 1,375 84.0% 1,919 31.8% 19,963 12,644 57.9% 15,236 31.0% 647 204 217.2% 649 -0.3%
Depreciation
and
amortization
excluding
IFRS 16 (6,516) (5,571) 17.0% (6,539) -0.4% (1,228) (1,349) -9.0% (1,247) -1.5% (688) (548) 25.5% (628) 9.6% (189) (204) -7.4% (184) 2.7%
Depreciation and
amortization (6,679) (5,571) 19.9% (6,539) 2.1% (1,626) (1,349) 20.5% (1,247) 30.4% (4,538) (548) NMF (628) NMF (269) (204) 31.9% (184) 46.2%
Net interest
income
(expense)
excluding
IFRS 16 (6,582) (4,712) 39.7% (6,703) -1.8% (957) (980) -2.3% (972) -1.5% (2,949) (2,757) 7.0% (3,373) -12.6% 127 (114) NMF 105 21.0%
Net interest
income
(expense) (6,613) (4,712) 40.3% (6,703) -1.3% (1,086) (980) 10.8% (972) 11.7% (4,052) (2,757) 47.0% (3,373) 20.1% 113 (114) NMF 105 7.6%
Net
gains/(losses)
from foreign
currencies
excluding IFRS
16 (93) (21) NMF (26) 257.7% (27) (4) NMF (23) 17.4% 206 1,886 -89.1% (1,565) NMF 63 38 65.8% 65 -3.1%
Net gains/(losses)
from foreign
currencies (115) (21) NMF (26) NMF (61) (4) NMF (23) 165.2% (27) 1,886 NMF (1,565) -98.3% 59 38 55.3% 65 -9.2%
Net non-recurring
income/(expense) (104) (871) -88.1% (362) -71.3% (52) 286 NMF (96) -45.8% 6 (411) NMF (22) NMF - - 0.0% - 0.0%
Profit before
income
tax expense 5,830 5,925 -1.6% 5,414 7.7% (295) (672) -56.1% (419) -29.6% 11,352 10,814 5.0% 9,648 17.7% 550 (76) NMF 635 -13.4%
Income tax
benefit/(expense) - (2) NMF 37 NMF - (2) NMF (2) NMF - - - - - (85) - NMF (148) -42.6%
Profit for the
period
excluding IFRS 16 5,867 5,923 -0.9% 5,451 7.6% (188) (674) -72.1% (421) -55.3% 12,136 10,814 12.2% 9,648 25.8% 478 (76) NMF 487 -1.8%
Profit for the
period 5,830 5,923 -1.6% 5,451 7.0% (295) (674) -56.2% (421) -29.9% 11,352 10,814 5.0% 9,648 17.7% 465 (76) NMF 487 -4.5%
Attributable to:
- shareholders of
the Company 4,317 4,504 -4.1% 4,423 -2.4% (315) (645) -51.1% (459) -31.3% 6,867 6,734 2.0% 5,445 26.1% 465 (76) NMF 487 -4.5%
- non-controlling
interests 1,513 1,419 6.6% 1,028 47.2% 20 (29) NMF 38 -46.5% 4,485 4,080 9.9% 4,203 6.7% - - - - -
(16) Represents IFRS 16 impact on General and administrative
expenses
Income Statement, Diagnostics Eliminations GHG
Quarterly
GEL thousands,
unless Change, Change, Change, Change,
otherwise noted 1Q19 1Q18 Y-o-Y 4Q18 Q-o-Q 1Q19 1Q18 4Q18 1Q19 1Q18 Y-o-Y 4Q18 Q-o-Q
Revenue, gross 1,154 696 NMF 870 32.6% (15,095) (6,901) (10,348) 235,211 207,689 13.3% 227,511 3.4%
Corrections &
rebates - - - - - - - - (559) (693) -19.3% (1,159) -51.8%
Revenue, net 1,154 696 NMF 870 32.6% (15,095) (6,901) (10,348) 234,652 206,996 13.4% 226,352 3.7%
Costs of services (831) (514) 61.7% (780) 6.5% 14,763 6,712 10,458 (158,497) (143,153) 10.7% (152,974) 3.6%
Cost of salaries
and other
employee benefits (289) (240) 20.4% (256) 12.9% 1,418 938 1,140 (27,955) (24,702) 13.2% (28,044) -0.3%
Cost of materials
and
supplies (393) (268) 46.6% (398) NMF 8,561 2,184 5,318 (5,528) (9,337) -40.8% (7,818) -29.3%
Cost of medical
service
providers (1) - NMF (1) 0.0% 1,278 900 1,078 (799) (733) 9.0% (879) -9.1%
Cost of utilities
and
other (148) (6) 24 (125) 18.4% 220 57 134 (4,337) (3,570) 21.5% (3,607) 20.2%
Net insurance
claims incurred - - - - - 3,286 2,633 2,568 (11,628) (8,585) 35.4% (8,275) 40.5%
Agents, brokers
and employee
commissions - - - - - - - - (769) (676) 13.8% (785) -2.0%
Cost of pharma -
wholesale - - - - - - - 220 (34,117) (26,097) 30.7% (30,162) 13.1%
Cost of pharma -
retail - - - - - - - - (73,364) (69,453) 5.6% (73,404) -0.1%
Gross profit 323 182 NMF 90 258.9% (332) (189) 110 76,155 63,843 19.3% 73,378 3.8%
Salaries and other
employee
benefits (234) (45) NMF (70) 234.3% 129 57 115 (23,395) (20,439) 14.5% (22,221) 5.3%
General and
administrative
expenses (84) (56) 50.0% (114) -26.3% 135 248 (149) (14,808) (12,637) 17.2% (15,001) -1.3%
Impairment of
receivables (4) - NMF (44) -90.9% 205 132 142 (1,172) (1,188) -1.3% (1,013) 15.7%
Other operating
income 47 (4) NMF 195 -75.9% (135) (247) (219) 629 1,820 -65.4% 1,762 -64.3%
EBITDA excluding
IFRS
16 48 77 -37.7% 57 -15.8% 2 - - 37,409 31,399 19.1% 36,905 1.4%
EBITDA margin
excluding
IFRS 16 4.2% 11.1% 6.6% 15.9% 15.1% 16.2%
IFRS 16 impact on
EBITDA(17) 6 - NMF - NMF - - - 5,126 - NMF - NMF
EBITDA as per
financial
statements 54 77 -29.9% 57 -5.3% 2 - - 42,535 31,399 35.5% 36,905 15.3%
Depreciation
and
amortization
excluding IFRS
16 (59) (44) 34.1% (35) 68.6% - - - (8,679) (7,715) 12.5% (8,634) 0.5%
Depreciation and
amortization (65) (44) 47.7% (35) 85.7% - - - (13,177) (7,715) 70.8% (8,634) 52.6%
Net interest
income
(expense)
excluding IFRS
16 - - 0.0% - 0.0% - - - (10,362) (8,563) 21.0% (10,943) -5.3%
Net interest
income (expense) - - 0.0% - 0.0% - - - (11,638) (8,563) 35.9% (10,943) 6.4%
Net
gains/(losses)
from
foreign
currencies
excluding
IFRS 16 (6) - NMF (2) 200.0% - - - 145 1,899 -92.4% (1,550) NMF
Net gains/(losses)
from
foreign
currencies (6) - NMF (2) 200.0% - - - (148) 1,899 NMF (1,550) -90.5%
Net non-recurring
income/(expense) (5) (11) -54.5% 7 NMF (1) - - (155) (1,006) -84.6% (473) -67.2%
Profit before
income tax
expense (22) 22 NMF 27 NMF 1 - - 17,417 16,014 8.8% 15,305 13.8%
Income tax
benefit/(expense) - - - - - - - - (85) (2) NMF (111) -23.4%
Profit for the
period
excluding IFRS 16 (22) 22 NMF 27 NMF - - - 18,273 16,012 14.1% 15,194 20.3%
Profit for the
period (22) 22 NMF 27 NMF 1 - - 17,332 16,012 8.2% 15,194 14.1%
Attributable to:
- shareholders of
the
Company (22) 22 NMF 14 NMF 1 - - 11,310 10,542 7.3% 9,925 14.0%
- non-controlling
interests - - - 13 NMF - - - 6,022 5,470 10.1% 5,269 14.3%
(17) Represents IFRS 16 impact on General and administrative
expenses
Selected
Balance
Sheet items Hospitals Clinics Pharmacy and distribution
GEL
thousands;
unless
otherwise 31-Mar Change, Change, 31-Mar 31-Mar Change, Change, 31-Mar 31-Mar Change, Change,
noted -19 31-Mar-18 Y-o-Y 31-Dec-18 Q-o-Q -19 -18 Y-o-Y 31-Dec-18 Q-o-Q -19 -18 Y-o-Y 31-Dec-18 Q-o-Q
Assets:
Cash and bank
deposits 7,536 29,196 -74.2% 17,704 -57.4% 616 2,730 -77.4% 576 6.9% 7,268 4,423 64.3% 17,305 -58.0%
Property and
equipment,
of which 526,836 505,159 4.3% 535,520 -1.6% 112,850 100,540 12.2% 102,116 10.5% 97,317 27,389 255.3% 31,292 211.0%
IFRS 16
impact 1,930 - 8,322 65,307
Inventory 17,439 17,794 -2.0% 16,978 2.7% 1,035 1,056 -2.0% 829 24.8% 127,512 90,463 41.0% 127,924 -0.3%
Liabilities:
Borrowed
Funds 246,565 242,720 1.6% 249,417 -1.1% 34,592 34,128 1.4% 34,585 0.0% 91,734 82,475 11.2% 100,423 -8.7%
Accounts
payable 31,993 29,974 6.7% 34,651 -7.7% 3,499 3,749 -6.7% 1,986 76.2% 81,055 55,956 44.9% 79,772 1.6%
Finance lease
liabilities 1,994 - NMF - NMF 8,615 8,244 4.5% 8,676 -0.7% 66,702 - NMF - NMF
Selected Balance Sheet items
Medical Insurance Diagnostics Eliminations GHG
GEL
thousands;
unless
otherwise 31-Mar 31-Mar Change, Change, 31-Mar 31-Mar Change, Change, 31-Mar 31-Mar 31-Mar 31-Mar Change, Change,
noted -19 -18 Y-o-Y 31-Dec-18 Q-o-Q -19 -18 Y-o-Y 31-Dec-18 Q-o-Q -19 -18 30-Sep-18 -19 -18 Y-o-Y 31-Dec-18 Q-o-Q
Assets
Cash and bank
deposits 12,124 9,087 33.4% 12,363 -1.9% 52 231 -77.5% 13 NMF - - - 27,596 45,667 -39.6% 47,961 -42.5%
Property and
equipment,
of which 16,036 15,081 6.3% 15,214 5.4% 14,415 13,856 4.0% 13,895 3.7% - - - 767,454 662,026 15.9% 698,037 9.9%
IFRS 16
impact 810 9 76,379
Inventory - - - - - 512 523 -2.1% 433 18.2% - - - 146,499 109,836 33.4% 146,164 0.2%
Liabilities:
Borrowed
Funds 5,939 8,598 -30.9% 5,966 -0.5% - - - - - (5,085) - - 373,745 367,922 1.6% 390,390 -4.3%
Accounts
payable - - - - - 937 1,004 -6.7% 1,222 -23.3% (13,482) (4,191) (12,539) 104,001 86,491 20.2% 105,092 -1.0%
Finance lease
liabilities 823 - NMF - NMF 10 - NMF - NMF - - - 78,145(18) 8,244 NMF 8,676 NMF
(18) Out of which GEL 69.5 million accounts for IFRS 16 impact
Selected ratios and KPIs 1Q19 1Q18 4Q18
GHG
EPS, GEL excluding IFRS 16 0.09 0.08 0.08
ROIC (%) 12.3% 10.6% 12.0%
ROIC adjusted(19) (%) 14.4% 13.5% 14.3%
Group rent expenditure 5,896 4,724 5,144
of which, pharmacy and distribution
business 5,325 4,055 4,442
Group capex (maintenance) 3,184 2,295 4,050
Group capex (growth) 6,321 22,505 11,003
Number of employees 16,092 15,491 15,922
Number of physicians 3,635 3,553 3,603
Number of nurses 3,404 3,305 3,342
Nurse to doctor ratio, referral hospitals 0.94 0.93 0.93
Number of pharmacists 2,971 2,948 2,518
Total number of shares 131,681,820 131,681,820 131,681,820
Less: Treasury shares (2,777,744) (2,800,166) (2,937,273)
Shares outstanding 128,904,076 128,881,654 128,744,547
Of which:
Total free float 54,154,256 53,763,151 53,994,727
Shares held by Georgia Capital PLC 74,749,820 75,118,503 74,749,820
Hospitals
EBITDA margin excluding IFRS 16 25.6% 26.6% 26.4%
Direct salary rate (direct salary as
% of revenue) 33.8% 34.1% 35.0%
Materials rate (direct materials as
% of revenue) 17.4% 16.6% 16.9%
Administrative salary rate (administrative
salaries as % of revenue) 10.6% 10.6% 9.9%
SG&A rate (SG&A expenses as % of revenue) 4.6% 5.2% 4.9%
Number of hospitals 18 16 16
Number of hospital beds 2,967 2,967 2,967
Hospitals bed occupancy rate(20) 62.3% 58.9% 56.3%
Hospitals bed occupancy rate, excluding
Tbilisi Referral Hospital and Regional
Hospital beds(20) 67.2% 65.1% 60.7%
Regional Hospital bed occupancy rate(20) 35.6% 1.2% 32.7%
Tbilisi Referral Hospital bed occupancy
rate(20) 52.2% 33.5% 46.5%
Average length of stay (days)(20) 5.4 5.5 5.2
Clinics
EBITDA margin excluding IFRS 16 18.7% 14.6% 19.1%
EBITDA margin of polyclinics excluding
IFRS 16 14.6% 13.5% 13.0%
Direct salary rate (direct salary as
% of revenue) 34.6% 36.5% 36.7%
Materials rate (direct materials as
% of revenue) 6.1% 6.4% 5.3%
Number of community clinics 19 21 21
Number of community clinics beds 353 353 353
Number of polyclinics 16 17 16
Pharmacy and distribution
EBITDA margin excluding IFRS 16 10.7% 10.0% 10.8%
Number of bills issued 7.16mln 6.70mln 7.15mln
Average bill size 13.7 13.9 13.9
Revenue from wholesale as a percentage
of total revenue from pharma 28.9% 25.1% 25.8%
Revenue from retail as a percentage
of total revenue from pharma 71.1% 74.9% 74.2%
Revenue from para-pharmacy as a percentage
of retail revenue from pharma 29.3% 28.8% 30.1%
Number of pharmacies 276 256 270
Medical insurance
Loss ratio 85.3% 84.3% 78.2%
Expense ratio excluding IFRS 16, of
which 12.6% 15.7% 18.5%
Commission ratio 4.4% 5.1% 5.7%
Combined ratio excluding IFRS 16 97.9% 100.0% 96.6%
Renewal rate 74.4% 70.6% 65.8%
Diagnostics
EBITDA margin excluding IFRS 16 impact 4.2% NA NA
Number of patients served ('000) 67 NA NA
Number of tests performed ('000) 172 NA NA
Average revenue per test GEL 6.7 NA NA
Average number of tests per patient 2.6 NA NA
(19) Return on invested capital is adjusted to exclude newly
launched hospitals and polyclinics that are in roll-out phase
(20) Excluding emergency beds
ANNEX
-- Corrections and rebates are corrections of invoices due to
errors or faults by third parties
-- Eliminations are intercompany transactions between medical
insurance and healthcare services
-- Gross margin - Gross margin equals gross profit divided by
gross revenue excluding corrections and rebates
-- Materials rate equals cost of materials and supplies divided
by gross revenue excluding corrections and rebates
-- Direct salary rate equals cost of salaries and other employee
benefits divided by gross revenue excluding corrections and
rebates
-- Admin salary rate equals administrative Salaries and other
employee benefits divided by gross revenue excluding corrections
and rebates
-- Selling, general and administrative expenses rate (SG&A
rate) equals General and administrative expenses divided by gross
revenue excluding corrections and rebates
-- Other operating expenses are operating expenses which are not
included in cost of sales and administrative expenses, which
primarily include the cost of medicines sold, any losses from the
sale of property and equipment, expenses on factoring, write-offs
of fixed assets and other
-- Operating leverage is calculated as the difference between
percentage increase in gross profit and percentage increase in
total operating costs and other operating incomes
-- Organic growth - percentage increase in healthcare service
revenue, excluding growth derived from any acquisitions during a
given period
-- EBITDA is defined as earnings before interest, taxes,
depreciation and amortisation and is derived as the Group's Profit
before income tax expense but excluding the following line items:
depreciation and amortisation, interest income, interest expense,
net losses from foreign currencies and net non-recurring
(expense)/income
-- EBITDA margin equals EBITDA divided by gross revenue
excluding corrections and rebates
-- The Group's rent expense comprises of operating lease
contracts
-- The Group's maintenance capital expenditure are short-term
expenditures
-- The Group's expansion capital expenditures are longer term by
nature and include acquisition of properties with longer useful
lives
-- Net Debt to EBITDA equals Borrowings less Cash and bank
deposits divided by EBITDA
-- Earnings per share (EPS) equals profit for the period / net
profit attributable to shareholders of the Company divided by
weighted average number of shares outstanding during the same
period
-- Bed occupancy rate is calculated by dividing the number of
total inpatient nights by the number of bed days (number of days
multiplied by number of beds, excluding emergency beds) available
during the year
-- Average length of stay is calculated as number of inpatient
days divided by number of patients. This calculation excludes data
for the emergency department
-- Renewal rate is calculated by dividing number of clients who
renewed insurance contracts during given period by total number of
clients
-- Commission ratio equals agents, brokers and employee
commissions divided by net insurance premiums earned
-- Loss ratio is defined as net insurance claims divided by net
insurance revenue
-- Expense ratio is defined as operating expenses excluding
interest expense divided by net insurance revenue
-- Combined ratio is the sum of loss ratio and expense ratio
-- Day's sales outstanding ratio ("DSO") equals receivables from
sales of pharmaceuticals divided by wholesale revenue of pharmacy
and distribution, multiplied by number of days in a given
period
-- Revenue cash conversion equals revenue received from all
business lines divided by net revenue.
-- EBITDA cash conversion cycle equals Net cash flows from /
(used in) operating activities before income tax divided by
EBITDA
-- Other operating income is presented on a net basis and is
derived from financial statements after subtracting other operating
expense
-- Net interest income (expense) and cost of currency
derivatives includes interest expense as well as cost of currency
derivatives as presented in the financial statements
-- ROIC is calculated as EBITDA minus depreciation, plus
interest income divided by aggregate amount of total equity and
borrowed funds.
COMPANY INFORMATION
Georgia Healthcare Group PLC
Registered Address
84 Brook Street
London W1K 5EH
United Kingdom
ghg.com.ge
Registered under number 09752452 in England and Wales
Incorporation date: 27 August 2015
Stock Listing
London Stock Exchange PLC's Main Market for listed
securities
Ticker: "GHG.LN"
Contact Information
Georgia Healthcare Group PLC Investor Relations
Telephone: +44 (0) 20 3178 4033; +995 322 444 205
E-mail: ir@ghg.com.ge
ghg.com.ge
Auditors
Ernst & Young LLP
1 More London Place
London
SE1 2AF
United Kingdom
Registrar
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol BS13 8AE
United Kingdom
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
QRFZMGMKRDMGLZM
(END) Dow Jones Newswires
May 15, 2019 02:01 ET (06:01 GMT)
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