Georgia Healthcare Group PLC (“GHG” or the “Group” – LSE: GHG LN), announces the Group’s third quarter and nine month 2016 consolidated financial results. Unless otherwise mentioned, comparatives are for the third quarter of 2015. The results are based on International Financial Reporting Standards (“IFRS”) as adopted in the European Union (“EU”), are unaudited and extracted from management accounts.
HIGHLIGHTS
GHG announces today the Group’s 3Q16 and 9M16 consolidated results, reporting a nine month profit of GEL 55.0 million (US$ 23.6 million/GBP 18.2 million) and earnings per share (“EPS”) of GEL 0.35 (US$ 0.15 per share/GBP 0.12 per share).
GHG – the leading integrated player in the Georgian healthcare ecosystem of GEL 3.4 billion aggregate value
9M16 financial performance
§ Net profit was GEL 55.0 million (US$ 23.6 million / GBP 18.2 million), (up 196.3% y-o-y)
§ Normalised net profit was GEL 27.9 million1 (US$ 12.0 million / GBP 9.2 million)
§ EPS was GEL 0.35 (US$0.15 / GBP 0.12 per share)
§ Normalised EPS was GEL 0.182 (US$0.08 / GBP 0.06 per share)
§ Revenue was GEL 290.4 million (up 64.8% y-o-y)
§ EBITDA was GEL 53.7 million (up 35.6% y-o-y)
§ Return on Average Equity (“ROAE”), normalised, was 12.4%3
3Q16 financial performance
§ Net profit was GEL 9.8 million (US$ 4.2 million / GBP 3.2 million), (up 86.3% y-o-y, up 21.4% q-o-q4)
§ EPS was GEL 0.06 (US$0.02 / GBP 0.02 per share)
§ Revenue was GEL 116.2 million (up 81.0% y-o-y, up 14.2% q-o-q)
§ EBITDA was GEL 19.7 million (up 23.1% y-o-y, up 16.9% q-o-q)
§ Return on Average Equity (“ROAE”), normalised, was 12.0%
Healthcare services – the largest healthcare services provider in the fast-growing, predominantly privately-owned, Georgian healthcare services market
9M16 financial performance
§ Revenue was GEL 178.5 million (up 27.9% y-o-y)
§ Organic revenue growth was 13.4% y-o-y
§ Gross profit was GEL 81.1 million (up 35.7% y-o-y)
§ EBITDA was GEL 52.8 million (up 42.7% y-o-y)
§ EBITDA margin was 29.6% (up 310 bps y-o-y)
§ Operating leverage was positive at 20.3 percentage points y-o-y
§ Net profit was GEL 56.9 million (up 250.8% y-o-y)
§ Net profit, normalised, was 29.7 million, (US$ 12.7 million / GBP 9.8 million)
3Q16 financial performance
§ Revenue was GEL 59.3 million (up 16.0% y-o-y, up 0.9% q-o-q)
§ Organic revenue growth was 14.2% y-o-y
§ Gross profit was GEL 27.4 million (up 26.6% y-o-y, up 2.7% q-o-q)
§ EBITDA was GEL 17.8 million (up 21.5% y-o-y, up 3.7% q-o-q)
§ EBITDA margin was 30.0% (up 140 bps y-o-y, up 80 bps q-o-q)
§ Operating leverage was positive at 17.6 percentage points y-o-y
§ Net profit was GEL 9.4 million (up 151.4% y-o-y, down 73.5% q-o-q, down 5.7% q-o-q compared to normalised profit)
Pharma business – the third largest pharmaceutical retailer and wholesaler in Georgia
Financial performance since acquisition (May 2016 - Sep 2016)5
§ Revenue was GEL 76.4 million
§ Gross profit was GEL 15.4 million
§ Gross margin was 20.2%
§ EBITDA was GEL 2.3 million
§ EBITDA margin was 3.1%
§ Net profit was GEL 0.2 million
3Q16 financial performance
§ Revenue was GEL 45.7 million
§ Gross profit was GEL 9.8 million
§ Gross margin was 21.5% (up 3.1 percentage points q-o-q)
§ EBITDA was GEL 1.8 million
§ EBITDA margin was 3.9% (up 2.1 percentage points q-o-q)
§ Net profit was GEL 0.6 million
Medical insurance business – the largest medical insurance provider in Georgia
9M16 financial performance
§ Net insurance premiums earned were GEL 45.2 million (up 5.0% y-o-y)
§ Gross profit was GEL 4.4 million (down 41.8% y-o-y)
§ Loss ratio was 83.6% (up 6.5 percentage points y-o-y)
§ Expense ratio was 20.8%6 (up 3.0 percentage points y-o-y)
§ Combined ratio was 104.4% (up 9.5 percentage points y-o-y)
§ EBITDA was negative at GEL 1.4 million
§ Net loss was GEL 2.1 million
3Q16 financial performance
§ Net insurance premiums earned were GEL 16.1 million (up 5.6% y-o-y, up 4.9% q-o-q)
§ Gross profit was GEL 2.1 million (down 31.2% y-o-y, up 61.6% q-o-q)
§ Loss ratio was 79.9% (up 5.6 percentage points y-o-y, down 5.1 percentage points q-o-q)
§ Expense ratio was 20.5% (up 2.9 percentage points y-o-y, down 1.3 percentage points q-o-q)
§ Combined ratio was 100.4% (up 8.5 percentage points y-o-y, down 6.4 percentage points q-o-q)
§ EBITDA was GEL 0.1mln (EBITDA excluding Ministry of Defense (“MOD”) related business was GEL 0.6mln)
§ Net loss was GEL 0.2 million
1 Normalized net profit is the net profit adjusted for one-off non-recurring gain due to deferred tax adjustments (in the amount of GEL 29.3 million for GHG, which fully resulted from the Group’s healthcare services business) and adjusted for one-off currency translation loss in June (“translation loss”) (in the amount of GEL 2.1 million), which resulted from settlement of the US Dollar denominated payable for the acquisition of GPC, the Group’s pharma business. For details on the deferred tax adjustments, see the explanation in the bullet point immediately preceding “Healthcare services business“ on page 5 of GHG 2nd quarter 2016 results announcement. The above mentioned adjustments were made during 1H16 and no new adjustments were added in 3Q16.
2 Earnings per share (EPS) equals Profit for the period attributable to shareholders of the Company adjusted for non-recurring income/expense, deferred tax adjustments and foreign currency translation gain/loss divided by weighted average number of shares outstanding during the same period.
3 Normalised ROAE is calculated as profit for the period attributable to shareholders of the Company adjusted as explained in “footnote 1” divided by average equity attributable to shareholders of the Company for the same period net of unutilised portion of IPO proceeds.
4 Compared to 2Q16 normalised profit
5 Pharma business financials are included since 1st of May 2016, as GHG completed the acquisition of the pharma business in May 2016 and started consolidation afterwards
6 In prior year GHG financial statements, the Group had offset agents’ commission fees paid for attracting insurance premiums with insurance revenue. Therefore insurance revenue was presented on a net basis in all prior period accounts. The Group reconsidered the presentation and decided that separate presentation of agents’ commissions aids
