cleopatra hospitals group - inktankir

Cleopatra Hospitals GroupCorporate Presentation (US)

February 2021

2Investor Presentation

Disclaimer

This document is and shall remain the exclusive property of Cleopatra Hospitals Group (“CHG” or the “Company”) and nothing herein shall give, or shall be construed as giving, to any partyany right, title, ownership, interest, licence or any other right whatsoever in or to this document. Neither this document nor any part thereof may be (i) copied, photocopied, duplicated orotherwise reproduced in any form or by any means; or (ii) redistributed, passed on or otherwise disseminated, without the Company’s prior written permission.

Although care has been taken to ensure that the information in this document is accurate, the information is prepared in good faith and that the opinions expressed are fair and reasonable,the information is subject to change without notice, its accuracy is not guaranteed, and the information has not been independently verified. This document may not contain all materialinformation concerning the Company or its subsidiaries (the “Relevant Companies”). None of the Company nor its subsidiaries or associate companies nor any of its or their respectivemembers, directors, officers, employees, affiliates or advisors make any representation or warranty (express or implied) or liability regarding, nor assumes any responsibility or liability for,the adequacy, accuracy, comprehensiveness, reasonableness, fairness or completeness of, or any errors or omissions in, any information contained herein. Accordingly, none of the abovenor any other person accepts any liability (for negligence, or otherwise) in respect of any loss arising from or in connection with any use of this document or its contents. All and any suchresponsibility and liability is expressly disclaimed. The recipient acknowledges and agrees that no person has, nor is held out as having, any authority to give any statement, warranty,representation, assurance or undertaking on behalf of the Company or any third party.

This document is for information purposes only and does not constitute or form part of any offer or invitation by or on behalf of the Company for sale or subscription of or solicitation orinvitation of any offer to or recommendation to buy or subscribe for any securities of the Company (“Securities”), nor shall it or any part of it form the basis of or be relied on in connectionwith any contract, commitment or investment decision in relation to the Securities in Egypt or any other jurisdiction. The information in this document does not take into consideration theinvestment objectives, financial situation, or specific needs of any particular investor, and should not be treated as giving investment advice.

In addition, this document contains certain financial information and results of operation, and while the document has been prepared in good faith, it may also contain certain projections,plans, strategies, and objectives of the Company, that are not statements of historical fact and may be treated as forward-looking statements that reflect the Company’s currentexpectations, beliefs, hopes, intentions or strategies with respect to future events and financial performance in light of currently available information. These views are based on severalestimates and assumptions based on currently available information which are subject to business, economic, political and competitive uncertainties and contingencies as well as variousrisks which are in many cases outside the control of the Company, and which may change overtime and may cause actual events and future results to be materially different than expected orindicated by such statements. No assurance can be given that future events will occur, that projections will be achieved, or that the Company’s assumptions are correct. Suchforward‐looking statements are not guarantees of future performance and accordingly, the actual results, financial condition, performance or achievements of the Relevant Companies maydiffer materially from those anticipated by the Company in the forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements.

The Company does not undertake to provide you with access to any additional information or to amend or update the information contained in this document or to correct any inaccuraciesherein which may become apparent.


Dr. Ahmed EzzeldinChief Executive OfficerCleopatra Hospitals Group

Hassan Fikry Strategy & Investor Relations Director

Cleopatra Hospitals Group

Ahmed BadreldinChairman

Cleopatra Hospitals Group

Call Participants


• Significant under supply of beds relative to population and strength of payor network vs. other emerging countries

• Strong market volume growth supported by demographic profile and growing insured population

• Pricing expected to grow on average inline with inflation yet remains well below pre-devaluation levels in USD equivalent

• Leading integrated healthcare provider in Egypt with track record of acquiring and integrating hospital assets

• Institutionalizing the healthcare industry in Egypt with a focus on medical quality, value pricing and corporate governance

• Delivering quality healthcare in a safe, reliable and caring environment through investment in people and facilities

• Diversified revenue stream with over 75% of revenue from insured patients

• Group wide tenders in pharmaceuticals and medical consumables that drive scale cost efficiencies and improve margins

• Scale volume benefits from providing payors with a healthcare services network solution

• Scale in attracting best in class doctors, consultants, nurses with a focus on quality of outcomes and patient safety

• Corporate Office with matrix organization & centralized strategy management

• Introducing new functions to the Egyptian Healthcare Industry –institutionalizing healthcare management

• Diverse industry experience and multi disciplinary approach to healthcare management

A Unique Investment

Story

A Unique

Investment Story

I

II

III

IV

CHG is A Unique Healthcare Growth Story


Overview of Egypt’s Hospital Market

Source: CAPMAS, Egypt Ministry of Health, consultants

0%

20%

40%

60%

80%

100%

100% Public

Basic Healthcare Centers

General Hospitals

Teaching InstitutesSpecialized Medical Centers

Armed Forces Facilities

Private Public

35,000 98,000

No. of Hospital Beds in Egypt (K) Total = 133,000 Beds

Includes Hospitals Owned & Operated by Public

Insurance

Highly Fragmented Space

C. 50 – 100+ Bed Hospitals only; Primarily in Cairo,

Giza & Alexandria

Mapping of Egypt’s Hospital Beds

Landscape of Egypt’s Hospitals by Function

Hospital Beds per 1,000 Citizens

10.5

4.6

3.5

2.5 2.21.8 1.8

1.3 1.1 1.1

Egypt’s Population 100mn growing 2mn per annum

Basic Healthcare CentersGeneral Hospitals (Public

Insurance)Specialized Medical Centers

Teaching Institutes / Medical Colleges

Armed Forces Facilities

Private Hospitals (Non-Government)

Level of Care

• First level of public healthcare

• Access to basic preventive & diagnostic treatment for common diseases & risk factors

• Support basic healthcare centers as well as some advanced care / treatment centers

• Accessible to members of the insurance scheme

• One of the highest level of public healthcare

• Provide advanced. Specialized care across key diseases & intervention

• Provide medical education, specialization across levels & fields

• Facilitate training & research

• High-end multi specialty facilities for the armed forces

• Available for access by paying premium rate

• Provide diagnosis,treatment advice, specialist inpatient services, and advanced care

• Better equipped than public hospitals

Number of Units 153 420 42 19 20 1,484

Number of Beds C. 18,000 C. 50,000 C. 1,500 C. 5,000 5000+ > 34,000

Level of Technical Facilities Basic Low Mid to High Medium Extremely HighMid to High

(Depending on Location)

Presence / LocationAcross Egypt – national

networkLocated in all key cities / tows

for each governoratesConcentrated in metro & tier

1 citiesConcentrated in metro & tier

1 citiesLocated in key governorates /

citiesAcross Egypt – concentrated

in metro & tier 1 cities

Client Type AllAll Egyptians with HIO / COO

coverAll – primarily referrals for

specialized careAll

Armed forces (free) private by paying

Mid to higher incomesegment

We estimate Egypt’s healthcare market growth at c. 6-7% in volume and c. 8-10% in price on average over time


Regulatory & Payor Environment

Source: MOHP 2010, World Bank Report “A roadmap to achieve social justice in healthcare in Egypt”

Egypt Healthcare Market Payor Profile

72%

17%

5%

5%

1%1%

28%

Out of Pocket MOH HIO Public Agencies Private / Syndicate Insurance Corporates/NGOs

Regulatory Framework

• MoH acts as main regulator of healthcare providers (licensing & approvals)• Private Healthcare services are not controlled nor capped by regulator (except

pharmaceuticals)• Private Insurance (Payors) are regulated by both MoH & FRA• MoH is rolling out a public mandatory healthcare insurance program (Universal

Healthcare Act) which is expected to grow the market for both public and privatedemand

• Target Segments A/B demand medical care from private providers• Consultant physicians can operate across more than one facility/hospital between

public and private

• Egypt’s healthcare market benefits from a growing institutional payor base ofprivate Insurance and direct corporate contracts, resulting in a widening the patientbase to include lower socioeconomic classes within the same A/B policies which isleading to healthy volume growth in the country of insured patients.

• CHG has been strategically working with institutional payor stakeholders to grow themarket and CHG’s share reaching a payor mix of c. 75% of CHG’s Group Revenuefrom institutional payors and c. 25% Out of Pocket (Cash) payors.

• Private insurance and institutional payor market penetration is expected to continuegrowing with higher penetration in parallel with economic and population growth.

Cash / Out of Pocket

Institutional (Insurance / Contracts)

Well defined regulatory regime with a progressive regulator and supported by strong and growing insurance payor base


Total 14,000 commercial beds in Cairo of which 8,500+ beds are in ‘30+ beds’ hospitals

Greater Cairo Hospital Groups by Commercial Bed Count

6

3 3 31

Building new capacity to reach c1,000 beds 2. Building new capacity to reach c900 beds 3. Building new capacity to reach c600 beds 4. Building new capacity to reach c500 bedsSource: CAPMAS, Egypt Ministry of Health, consultants

Hospital Groups in Cairo (Operational) – Bed Count

Hospital Groups in Cairo - # of Operational Hospitals

Market Share in Cairo by # of Commercial Beds

78216712

481

30032604

Greater Cairo population is estimated at 24 million, with a growing number of privately insured

CHG8%

Alameda7%

Elaj4%

Saudi German4%

Andalusia2%

Other75%


1,000Consultant physicians attracted from the top two medical universities

+53002400 medical staff including c. 850 resident doctors and c. 1000 nursing staff

6 Hospitals • 782 Beds • 150 fully equipped

ICU Beds • 6 Cath Labs • Full Comprehensive

Specialty Coverage

2 PolyclinicsOffering comprehensive outpatient and full array diagnostic services in addition to home visits

Bedaya IVF 1 Operating facility –Q42020

Expansion with 1 new facility as an integrated fertility, mother & child center

• Cleopatra Hospitals Group (the “Group” or “CHG”), is Egypt’s largest private hospital group by number of hospital beds and operating hospitals and consists of six operational hospitals and two polyclinics all in Cairo, namely:i. Cleopatra Hospital (100.0% ownership)

ii. Cairo Specialized Hospital (55.4% ownership)

iii. Nile Badrawy Hospital (99.9% ownership)

iv. Al Shorouk Hospital (100.0% ownership)

v. Queens Hospital (100.0% ownership)

vi. Al Katib Hospital (100.0% ownership)

vii. Cleopatra Hospitals Group Clinics (100.0% ownership)

• Over the last five years, the Group has revolutionized the Egyptian healthcare industry by bringing high quality, integrated healthcare solutions to a growing number of patients across a constantly expanding geographical footprint

• Around 75% of revenue generated from insured & contract patientsAround 75% of CHG’s revenue are generated from hospital

focused services.

CHG is a Diversified Healthcare Services Group

25%

15%

28%

10%

5%

11%

6%

Inpatients

Surgeries

Outpatient Clinics

Laboratory Services

Cardiac Cath Services

ER

Radiology


Broad Network Coverage in Greater Cairo

9

10

6th October location 2021

Maximizing referral potential while optimizing utilization across facilities during COVID-19


Well defined integration model

CHG Medical Council

JCI Roadmap Unified Sops &

Hospital Manuals Standardized Quality KPIs

Catering & Kitchen Upgrades

Specialty Club Meetings

Nurse & Medical Teams Training

Programs

Centralizing Non-core Functions

Unified Call Centre

Unified & Integrated

Ambulance & ER Protocols

Utilization Enhancement

Across All Segments

Medical Tourism OPD Slot

Management ICU Bed Additions

Corporate Governance

Centralized Corporate Office

Unified Authority Matrix

Expansion Strategy

Umbrella Brand Name for Each

Individual Group

Unified Pricing & Positioning

Strategy

Unified Financial Sops &

Reporting

Value Creation Plans

Standard Organizational Chart / Matrix

Org

Salary Scale Exercise

New Incentive Schemes

Health Insurance Schemes

Training & Development

Programs

Employee Satisfaction Surveying

Profit Share Schemes

Appraisal System

Group Wide Tenders

Item Unification Consumables

Unification Standard

Warehousing Medical Capex Across Group

Medication Tendering And Management

Material Planning

HIS/ERP System Roll

Out PACS System Facelifts

COEs Equipping

OR Renovations

Electromechanical Upgrades

ICU Upgrades And Extensions

Diagnostics & Auxiliary Units

Upgrades New Cath-labs

One Stop Shop

COEsDrug

Formulary Cross Asset

Referrals

Doctor Engagement & Referrals

Unified Insurance & Corp Deals

Revenue Cycle Management

Surgical Packages

Enhancing Case Mix

Integration, Optimization of Operations

Institutionalizing the Group

Human Resources

Supply Chain & Synergies

Infrastructure / Technology Upgrade

Business Development

Quality

Optimize Capacity and Patient Flow

Effect on CHG

Optimize operations and management

Standardize and improve quality

Enhance margins

Stronger bargaining power

Establish Partnerships with leading companies

Attract high qualified medical staff

Establish Centers of Excellence

Shared cost benefits

Improve collection / billing

CHG has completed over six consecutive buy and upgrade integrations between 2014-2020


Covid-19 and Our Response

PHASES PREPARE PROTECT AND RESPOND ADAPT

Description • Pre-Covid 19• Full range of healthcare

services offered across all facilities

• Anticipation

• Covid19 cases increase • Treatment done in public

hospitals • National lockdown

measures

• Relaxed lockdown • Private hospitals accept

covid19 patients • Intermittent spikes

Key Actions • Medical Council introduces

patient pathway protocols • Training and education • Medical supplies and

inventory management incase of shortages

• PPE availability

• Health & Safety Measures –wellbeing of our caregivers & patients in focus

• Business Continuity & Contingency planning

• Introduce medical guidelines according with latest global expertise

• Continues engagement with MoH

• Developing detailed operational plans to allow continuation of non-Covid19 treatments and medical services

• Transformation of 2 facilities into covid19 referral hospitals

• Leverage groups capabilities to introduce new and supportive services (home visits , video consultations)

• Commercial strategy to ensure business continuity and market share over non-Covid19 services and revenue streams.

• Continue scenario planning and crisis management practices.

Impact on Patient Volumes

No Impact High Low/Medium


Consolidated revenues increased 16% y-o-y (+58% q-o-q) in the third quarter of the year to record EGP 535.9 million, on the back of recoveringvolumes, favourable pricing, and an increasingly optimised service mix. Gross profit for the period expanded 12% y-o-y to EGP 186.4 million for thethird quarter of the year, with the Group’s gross profit margin returning to its historical averages, recording 35% for the quarter. Net profitexpanded 11% in 3Q2020 to reach EGP 80.0 million. Net profit margin was largely stable versus last year at 15% for the quarter.

Financial Performance Through 3Q2020

1 Adjusted EBITDA: Earnings before Interest, Tax, Depreciation and Amortization adjusted for provisions, impairments, LTIP, acquisitions expenses, pre-operating expenses and excluding contributions from other income.

Group Revenue | EGP mn

748 8641,127

1,4561,798

2015 2016 2017 2018 2019

CAGR: 19%

462 536

3Q2019 3Q2020

16%

Net Profit | EGP mn

6989 118

315265

17%

10% 10%

22%

15%

2015 2016 2017 2018 2019Net profit Net profit margin

72 80

16%

15%

3Q2019 3Q2020

Adj. EBTIDA1 | EGP mn

174 197 259403

501

23% 23% 23% 28% 28%

2015 2016 2017 2018 2019

Adj. EBITDA Adj. EBITDA Margin

128

151

28%

28%

3Q2019 3Q2020

Gross Profit | EGP mn

234 252 339514

626

31% 29% 30%35% 35%

2015 2016 2017 2018 2019Gross profit Gross profit margin

167 186

36% 35%

3Q2019 3Q2020

ROIC

14% 14%

33%

22%

2016 2017 2018 2019

Management is targeting long-term ROIC of 30%

CAGR: 24%


Committed to ESG & Sustainable Development

Mission: To ensure that we improve sustainability by managing our resources responsibly and efficiently to the benefit of our stakeholders and the environment.

• Measurement and monitoring of environmental KPIs

• Effective environmental management system• Sustainable use of water resources • Continuously aiming to comply to IFC performance

standards and world bank group EHS guidelines

• Employee and doctor engagement • Employee and caregivers health & safety • Corporate social investment • Supporting public health and MoH initiatives• Diversity & Inclusion

• Anti-bribery and anti-corruption (ABC) • No Referral fees • Medical Council & effective board • Effective and transparent governance • High quality healthcare infrastructure

EnvironmentalReduce our impact on the environment

SocialTo be the partner of choice for our stakeholders

GovernanceTo remain an ethical and responsible corporate

• Water Usage • Electricity Usage • Medical Waste

• Diversity of age groups KPIs • Number of Females in workforce and

management • Training hours • Workplace incidents reporting

• Board Committees • Internal audit reporting • Quality KPIs

Environmental KPIs Social KPIs Governance Reporting


Organic Strategy Focused on

Delivering Long Term Value

Patients first mentality focused on quality of outcomes and value for service

Prioritize operational delivery to enhance

performance and efficiency

Delivering for organic growth across our

healthcare spectrum

Agile corporate culture ready to

create opportunities

Enhancing our trusted brand and

employer of choice recognition

Strong financial position and liquidity

Optimize and Expand Our Service Offerings in the Hospitals through Centers of Excellence

Continue with the hub and spoke model for the Polyclinics Offering

Transform our healthcare services and patient engagement through digitalization


Leverage CHG’s operating model, launching facility

management platform as a start

Expand presence in low penetration

cities through single asset

acquisitions (hub + spoke model)

Construction of a 189-bed hospital in

Bani Suef Governorate

Multi-hospital acquisition

announced of well reputed hospital group in Egypt

Expansion Strategy Clearly Defined

1

Strategic Acquisitions of Operating

Facilities

2 3

Brownfield / Greenfield Expansions

Expanding Reach Beyond Greater Cairo

4

Expand into third party hospital

operate & manage services


95%

5%

Fahad Khater Arrow

• Alameda is among the leading healthcare service providers in Egypt with its origins first rooted in Professor Salah Khater’s investment in As-Salam International Hospital in 1999. Alameda is majorityowned and chaired by Dr. Fahed Khater, a prominent pioneer investor in the Egyptian healthcare market and a qualified physician with an MBA in International Healthcare Management. Alamedamanagement is led by Mr. Neeraj Mishra, an experienced healthcare professional, since Q2 2019 (previously he was COO of Max Healthcare in India).

• Alameda Healthcare’s network currently includes three tertiary care hospitals in Cairo with 671 beds currently operating under the Dar El Fouad Hospital and As-Salam International Hospital brandnames in addition to a 95 bed expansion in As-Salam International Hospital and a 137-bed hospital in New Cairo that is currently under construction with more than 700mn invested to date. Inaddition to the well invested asset base, Alameda has one hospital under construction, one new hospital that is currently ramping up and two expansions on the fully operated hospitals which suggesthigh room for growth on all assets

• For the nine-month period ended 30 September 2020, Alameda’s un-audited revenues amounted to approximately EGP 1,493 million(1) compared to EGP 1,435, representing a growth of 4% year-on-year despite the overall market challenges resulting from the COVID-19 pandemic and the lock-down imposed during the first few months of the pandemic

Reputed hospitals with c. 70% corporate and

insurance payor profile and only c. 30% cash patients

and significant historic investment in capacity and

infrastructure in addition to new greenfield capacity

operational in 2021.

~ 465,915

Outpatients

4

Facilities

4,500+

Employees

110

Clinics

671

Hospital Beds

~ 36,750

Inpatients

Key Highlights

(2020)

Hospital Assets(2) Alameda Shareholding Structure

100%

As Salam International Hospital

52%

Dar Al Fouad 6th of October Hospital

58%

Dar Al Fouad Nasr City Hospital

(Opened in 2018)

100%

As-Salam International Hospital Katameya (To open in 2021)

(290 | 385 Beds)(3) (211 Beds) (170 Beds) (137 Beds)

~ 3.3mn(5)

Revenue per Bed

Note: all KPIs are subject to due diligence and reclassifications to match CHG’s definitions Note (1): Based on unaudited management accounts as received by the Alameda managementNote(2): The diagram represents Alameda Group’s beneficial shareholding in each respective assets (not legal corporate structure)Note(3): Upon finalization of ongoing hospital expansionNote (4): SEDCO owns 15.3% and 15.8% stakes in DAF 6 Oct and DAF NC, respectively Note(5): Based on 2020E revenue, excluding KIH’s number of beds and As-Salam expansion bedsNote (6): 2020 and 2021 EBITDA before Provision for DD and one-off nonrecurring expenses (including transaction costs)

Alameda Group Acquisition - OverviewAlameda Overview

671 operational beds

EGP mn 2017A 2018A 2019A 2020E* 2021B

Revenue 1,161.3 1,459.9 1,957.8 2,183.4 2,912.9

Growth (%) 25.7% 34.1% 11.5% 32.8%

EBITDA(6) 166.8 252.2 488.8 567.1 772.2

Margin (%) 14.4% 17.3% 25.0% 26.0% 26.5%

Alameda’s Income Statement Highlights

* 2020 financial performance impacted by COVID-19

(4) (4)


DAF

Nasr City

DAF

6th October

As-Salam

Katameya(under construction)

As-Salam

Maadi

AL KATIB HOSPITALQUEENS HOSPITAL

Alameda Group Acquisition – Complementary Network


Q&A

INVESTOR RELATIONS CONTACTS

Telephone: +2 02 23103771E-mail: [email protected]

SHAREHOLDER INFORMATION

EGX: CLHO.CAListed: June 2016Shares Outstanding: 1.6 billion

mailto:[email protected]

investors.cleopatrahospitals.com

cleopatra hospitals group - inktankir

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