Q3 2020 New Frontier Health Corp Earnings Call
Good day, everyone and welcome to the New Frontier Health Corporation third quarter 2020 earnings Conference call. Please note that today's call is being recorded every day.
Now I'd like to turn the conference over to Mr. Bill Zima of ice Yahr. Please go ahead.
Thank you operator, Hello, everyone and welcome to New Frontier Health third quarter 2000, <unk> earnings Conference call.
The Companys earnings results were released earlier today.
And the Companys IR website at Www Dot and H Dot Com GAAP.
Yeah.
In addition, the remarks today will be accompanied by a presentation, which can also be and all the companys IR website.
We couldn't hear please note that the discussion today.
The forward looking statements made under the Safe Harbor provision from the U.S. Private Securities Litigation Reform Act and 1995.
Yeah.
Forward looking statements involve inherent risks and uncertainties.
Our results may be materially different from the views expressed today further.
Further information regarding these and other risks and uncertainties is included in our form 20-F filed with the U.S. Securities and Exchange Commission from March 31st 2020, and other documents filed with the U.S.C.C.
New frontier does not assume any obligation to update any forward looking statements, except as required under applicable law. It's.
Its press release also includes financial measures that are not calculated in accordance with international financial reporting standards as issued by the international accounting standard work.
For reconciliation of these measures to most comparable measures calculated in accordance with <unk> for us. Please.
Please see the earnings release or Investor presentation, published by New Frontier Health today and filed with the <unk>.
You see on form 6K.
Well, how much interest the management team and a call today Mr. Burton, if and Chief Executive Officer of New Frontier Health and Mister car Wash <unk>, President and a page and <unk> are the executive Committee of the board will provide updates for the quarter. Although he made his prepared remarks, we will open up the call to questions Gerald.
Sure on the QNX session Mr. wall to shoot Oh, I don't H. and Mr. David song.
Oh and of age will also be available to answer any questions.
With that said I would now like to turn the call over to Roberta Robertita. Please go ahead.
Thank you Bill and Hello, everyone and thank you for joining us for a discussion of our third quarter 2020 keep us all.
During the quarter as dependent and the continued to evolve around the world. We were pleased with the performance of each of our business segments. Both.
Most of my thoughts on the Mi and patient behavior gradually returned to near normal day corridor, driving sequential growth and our revenues and patient volume.
We are optimistic about the ongoing trend to non recovery observed in the quarter as demonstrated by the increase from both the outpatient and inpatient numbers from the prior quarter.
For those of you following along with our presentation day, Please turn to slide 14 toward snapshot of the quarter.
And the Chinese government implemented various measures during the pandemic the cobot situation and has peaked and substantially under to come under control and the economy started to pick up across the country towards the end of Q2 and throughout Q3.
We have also seen a significant recovery and our business this quarter and patient visits increased significantly from Q true by 21.7%.
Late July saw a spike and cases here in China, and the temporary reinstitution of emergency control.
After the resulting restrictions short and used in August and.
Patient volume began to recover significantly by September total outpatient volume of operating assets had exceeded the volume of the same month last year.
We have seen similar recovery trends true inpatient admissions, which increased by 7.3% from Q3 2020 over Q true.
Most of the increased admissions were from major surgery and medical cases and.
However, total inpatient admissions force jokes, 15.1% lower than last year's level, primarily due to fewer admissions and obstetrics Department and there was also a continued decrease in the birth rate across China, and fewer admissions and pediatrics and well.
At schools remain closed and enhanced personal hygiene and protective measures for school children were implemented.
In addition book.
Outpatient and inpatient A.S.P. and [laughter] corridor as a result of an increase and the number higher acuity services all forget all facility.
As a result, our revenue in Q3 2020 recorded a 3.7% year over year increase and a 14.1% increase from the prior quarter.
We were also pleased to continue to achieve strong growth in adjusted EBITDA and net third quarter adjusted EBITDA increased by 162.8% year over year. The increase in revenue and EBITDA were primarily attributable to the steady recovery of patient volume and Sunbury.
That held true across our facilities and.
Implementation of cost savings and they should it as well as strong ramp up of our expansion assets and quantum Joe and Shanghai Pudong interest, she which achieved 36% year on year book and revenue in Q3 2020.
Please now turn to slide 16, which illustrates the recovery and possibly.
Local and ex Pat patient basis.
And the closure of international borders and the other travel restrictions within China.
The pandemic Sunset the company has seen a shift and patient mix, there with significantly higher volume and revenue contributions from domestic pension.
Plus the U.S.H. network.
By a temporary we and position of restrictions and Beijing. The company book quoted a 11% year over year growth in revenue from local patients in Q3 and.
September revenue from Chinese patients reached 16% year over year growth.
This demonstrates hybris, Lillian and an increase in Japan for a premium private health care services from Chinese consumers.
However.
Although our the patient volume during the third quarter Gillette pretty Penn General periods, we continue to see a favorable trend and more coverage and in fact, there was an increase in far and patient volume and a third quarter compared to the second quarter.
On September 20 Eightth.
The Chinese government announced a slight easing up and travel restrictions and foreign nationals coming into China and as a result, we expect to see continued recovery of far and patient volume and.
We are pleased with our latest for cooperate and believe it bodes well for the growth of our business I'll now turn the call over to Oh, well share our latest developments problem. They said month Oh. Please go ahead.
Okay.
Well said, we've taken the right that's true to speed up to be coffee profit and pick pack and next year's growth here.
He sends and slide 16 illustrates Nick on local and expectation.
And then kick off Keith that's really.
And your travel restrictions from falling in Nashville, and since it and dynamic onset and increased demand from Chinese patients.
The company has seen a shift and taken it and.
And he Nike and do you want to accounts all patients flow location, and 29% will fall in patients and.
Okay. So you can see the compete ski and hi, voting and revenue contribution from from domestic patient and coffee you average that look and feel can be chunky, yes, you day revenue that book and how do you see it all seems domestic patients has increased to almost 80% and that helps that from a big decline ex that patient day.
And the right and it's like the majority of us actually piece of it that we probably well and Q he'd seen strong Gail and good revenue growth for a variety of that true teaching kidding suddenly medicine, internal medicine surgery and orthopedic and.
And trading strong demand from our Chinese station, Okay patient flow high acuity medical teams.
However, our overall revenue would be impacted by lower oil that's extraordinary juice and nationwide and go and that's great and attendees from Ti and lower revenue from pediatric and schools remain close and and that's all hygiene and protect this metric sports nutrition waiting for net.
Volume situation for this site and expectation, that's well pediatrics and hope that you speak himself and he's got the exact and see growth momentum up and that's age to accelerate next year.
Now please turn to sites and people were excited to be called day off the only 21 loan from operation and.
Yeah, and Guam zone, which has to be public policy EBITDA for the effect on the night and maintain positive EBITDA and stuff.
Even during the overnight computing and clump <unk> seal has seen many months will continue and spoke and growth driven by well be Jackson, both top and cat internal medicine, orthopedic and spine surgery, as well and recently extended cosmetic and apology census growth.
Recent new although Oakland, it'll still be called me and Nike set and EBITDA margin and trading the possibility profit profit potential and expect.
We expect EBITDA margin to continue to extend its patient voting and ready and continuing to ramp up.
Okay, I'll try and high speed all flow.
Okay, and we called it significant growth from book outpatient and new patient volume.
In Q3 revenue from Pudong also achieved 37.6 and stuff you don't get growth.
And I read your Goodbye Ob Jan family Medicine, and that and specialty.
That's true high football whole foods achieved EBITDA topic, even and can be can you want.
Piece and the slide 18, and 19 I'll share a few updates all true upcoming.
Computing and you're not depending on.
From the construction schedule office and didn't get from two nice and you also remains on track and.
Like to cope with Nike and situation.
Teach and opening expected in Q3 trends and frenzy.
New hospitals and lines of 350 bed, and possibly 64000 square meters glossed loss, I guess provide comprehensive medical physics, and ranging from especially from including Becky pediatric 70, net adds and emergency medicine to oncology and obviously.
It seems and Caulfield located in the Middle East and just what the pipeline ex that are supposed to patient.
And since in Hong Kong and that's it to attract patients will get good thing also meet and we can be non public.
Net engine to teach and such as the GE and.
Oh, and the Chief Nursing Officer, Chief revenue Officer, HR directors have come from all other specialty Chesapeake and finally, Mike.
Marketing campaigns and promotes and didn't you might get that Andy and educate local market and the population and I'm planning to launch in Q1 in Q2 from next year, but.
No it does and mumbled favorable policy, and then well medical civic sector and sends and following pregnancy leads and that's it.
It'd be neat since then and I guess is uniquely positioned to capture phase will likely be bought and for the day to day.
It's quite likely Dolphins and hospital will be able to use both Hong Kong and logistic and Chinese drops keeping up and that's good advantage no problem and hopefully.
On page 19, a Beijing and I've found any thoughts and how cool and completed construction and up itself opening and watch trinity's anymore and.
New also doesn't make it from level three ought to go with 200 bed and and to provide comprehensive medical services.
Okay from Ob, Jay and PPR pediatrics to attract younger and younger Cups and then.
The Street.
The dots and also will be managed and operated and integrated pop the Beijing market, which is expected to create revenue synergies and cost and fusions.
Several specialty talent I come from to the New hospital with the popular P.J.M. teach and I'll just scheduled to visit docking and net attendees and regularly.
Page 20 shows the historical revenue run public salsas and if he since inception, the blue light and don't sell Beijing and I found the whole flow since its opening and 1997.
Also was able to cheat and linear growth historically and through continued new bed capacity growth flow area and that new specialties and capabilities as it sits and see this trend has been consistent across all of our facilities and.
And so does demonstrate the potential and the consistency and socket mobile book to Bill.
Really excited to reported programs with all new field and extension that's it there.
And all and just like you know a wonderful halsall and I'll, Shanghai Pudong Hospital, which are able to achieve strong revenue ramp up even throughout the cold and liking per year.
We're also able to exceed the revenue level of TSG and just under two years of operations.
Moving all the details Beijing beauty, and one lease expiration I'll provide it and it's like drinking water.
The lease from doing one off the Beijing and that the campus and started and like the magic price L. Three new and 2016 and.
The new all excited and descended Cityfed 2020 and we've yet to reach and extension agreement.
And is underway for the potential non renewal plants will sit and existing operations to be reallocated to existing U.S.H. satellite clinics as well, although you average facilities and Beijing and that's.
Disputing housing starts and most critical function of the Beijing, China Hospital, including imaging obstetrics walk central city parking and lesions and others.
Majority of the clinical function will be also be replicated computing true and moving three.
Well, we have that capacity.
And in addition to some new lead street plant and measured space adjacent to the whole.
Losses, and patient and that's in the T. Rowe price will be supplemented by New New York State and the new thoughts and you open and set top box and each anymore.
You know they tend to be operating off day I also like to introduce choose to true you cooperation agreement signed that seemed out and that is done and we hope to though.
And that can be true.
During the call to she Doesnt net assembly healthier site and agreement book close cooperation with some don't and you could see channel. This.
This is walls and leading public hospitals and China. The agreement calls for clinical collaboration that by offering a patient he said bench and medical specialty type and that's well offering traditional patients about public fishery facility options would seek quicker access and more personalized cash adults and GAAP facility.
I'm just trying to book the Corporation did she lost deal with <unk> medical telling the true Shimon and good that you see wholesale on a regular basis and.
Seemed all physicians will be able to engage and academic communication from the old Chicago and that's to be careful.
Additionally, the channel hospital completed construction of its radiation therapy cancer treatment center, essentially managed to try and eat like Q do you and the I call and cooperation of Australia, and the profit sharing agreement signed in August and says yes Hello.
They have to ask Gary Lineker incentives executive tract cancer patient like 50 office leasing revenues from imaging, the poetry and surgery to the hospital.
The exciting new business, although a lot and if and how to directly access long and polymer and topic.
As we look forward to remain true 2020 remain focus on strategic growth quality.
On slide 23.
And he began to see results from our geographic market reorganization and consolidation and we expect to continue that assume more revenue synergies and coming from there.
The facility is now contributing to our new and all new sales the opposite of peace and prolonged and she will continue and make good progress and.
We're also continuing that and they'll call market and expense all from me.
Downhole and baking hope LPG and that was done in the hospital and new hope oncology Centex and that capabilities. This investment income and the uptick and.
Particularly the Beijing health, you'll make a major update and as GE and by system. This upgrade will enable higher quality and higher speaks getting off the plane hobby morphology and function and all senses more cash.
In addition, and new software platform and post processing will extent functional imaging and quantitative scanning from Barry additional completion.
The result will be able to significantly enhance the service range and the capacity of our clinical services.
In addition, our new home and policy Center stage and upgrade is very and linear accelerator gene into the latest every day because of treating and planning software and major upgrade will bring the latest be government and radiation therapy to the center, one keep and its ability to create that the clinicals treatments and all patients.
And we'll be able to move more quickly from assessment and diagnosis and treatment and more accurately calculate that individually and 10 for each specific case. This will also reduce patients treated and Tom and I expect it to produce that the clinical outcome.
Great well, although a lot off and to connect with other specialty centers to collaborate more efficiently to provide the best care, we possibly can tell patients well.
And we remain focused on developing our digital capability and the coming quarters, and we'll continue to bed and cost control WAF and selecting facilitating business recovery.
And the mall remain on track as we prepare for the opening of thinking that's and hospital and its into the hospital, which will happen moving back and contract from all different.
Finally, I'd like to conclude by presenting our outlook for the fourth quarter.
Sorry for the Q4 generate higher revenue per student flu season, and how holdings and emergency medicine, and they'll from PDP decline in interest from real trauma cases from Q4. This year given the higher production of the general population and that the personal hygiene practices. We expect that the flu season. She was a general volumes about that because of diesel school children.
And I don't expect to see less from Oh PD patients.
That's all from the fourth quarter, the company ex that and see more and that's a flat growth year on year in terms of growth.
This concludes our prepared remarks, operator were now ready for questions.
Thank you well now be conducting a question and answer session. If you like to ask a question today. Please press star one from your telephone keypad and.
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One moment. Please so we poll for questions.
Thank you and our first question is from the line of Jewish and Lewis with Credit Suisse. Please proceed with your question.
[noise] Hi, good morning, and good evening registry and Uh Huh.
Graduations and a quarter results I have three questions here that I would like to ask the team on line.
The first question is more on a general trend or kind of question could be I guess directed more towards Roberta and previous earning calls you had mentioned that you know post Sars.
We have seen you know I speak and starting to wind down and that there also is a pick up and birth rates as well as you know be joy and services I'm wondering if.
And with Kobe have you started to see some of the pick up or and maybe something that is more further out looking.
That's my first question and then my second question is along the lines of some of the expense management and and cost control efforts that Carl was talking about earlier.
As we look beyond 2020 and into 2021 2022.
We continue to expect some of these cost control measures to be extended or do we expect a salary wage and benefits to increase and result in a post kobin environment and then my third question is true. So I was wondering if management can comment on overall progress.
Potential secondary listing or dual listing and other markets and either and China, Hong Kong and what did from package on these activities Ah. Thank you very much.
Thank you okay and.
And in terms of the post call that trend breast and suppose so I'll try and and it's it's actually quite an interest in comparison I think one of the big jump from says pellets coal and.
If we can call this telescope and although we actually do really feel like we're returning to much more of a normal situation.
Well, yeah. Unfortunately, although China is doing great the rest of the world, but still a bit of them and so as we mentioned earlier.
We're seeing.
[noise] less recovery and our international patients, although in the last month or two they stop and see and international patient slowly come back, but still international flights and to try and are extremely limited and anybody that comes and has to happen to require and team.
So yeah. That's that's that's one issue on the other and I think we've seen the same kind of increased uptake by Chinese patients on non only due to China, becoming a more normal and our our car traditional Chinese patients from.
Turning but also a lot of new new patients a lot of and rapid growth and patient per ton visits true up at all.
And I think that that is reflective of what we saw I'm, sorry, because people because I'm thinking more about the importance of their health and began thinking that in fact, they need to keep up their health, but they don't want to go to crowded public hospital out and.
So I I am very encouraged by what we're seeing here with me segments of Chinese population comp coming and in terms of that Russia and China.
Childbirth, and there's no way to come about nine months after the lock down I'm afraid we haven't seen a whole lot of that and then even if there is.
Oh actually you know I've been saying a lot and very pregnant Lady is walking around and and so those are the result of that [laughter]. There's nothing that's true, but unfortunately, the decrease from the birth rate and general I think might be masking whatever kind of small surge there wouldn't be posed.
Coal bed and and childbirth. So I don't know if that explains cash fully.
Alright, but that's my thinking on that that there might be a good and the search, but it's probably mapped by the downturn and the birth rate. So we're not looking to up that's correct a lot and many more of course for our growth you see the focus that we have on non-GAAP.
That's true business and increasing from the serious security to bring new patients and.
And Ah caught serving person calls with you on that and so I think well be adding that was doing that process flow finalizing though that's true.
For 2021, so I think the cost matches to being to June and and stuff. However, at the minimum and I think during our previous.
Previous quarterly results rehab, and then says and cost cuts that were supposedly and then and definitely go school, obviously remain place death and cost cuts out 10, Curry and we expect that said and poultry will start to recover and that's business. We call. This that's flow but I.
I think Q4 results and.
And so Keith and visit more clarity on that and I think you also asked about the delisting and Hong Kong and something that we're actively working on and will update you on this with from more concrete and people and Uh huh.
Wouldn't wouldn't that ready however, it appears that and Btwenty, one could be up and entry the right Tom wants to do it I'm, having said that we'll also be waiting for the right a mock and wouldn't do.
No.
Obviously hope that we could do it a more specious share price and so that's something that we're working on but and tens of qualification and the piece that we are.
Parents free sample and regulatory perspective at the same time, obviously with and doing a lot of work on that and marketing and you probably also saw that no liquidity has.
Improved over the last several months as well, although this season and this could bring in time for improvement and would be non vocal piece and that should go hand in hand, and simple hopefully improving or not and share price performance.
Got it thank you very much and that's all.
Thank you Mr. My Dream and press Star one to ask a question at this time.
Thank you for your future be no further questions at this time and that's just time and let's turn the call back over to management for any closing remarks.
Oh, no I I just want to thank everybody one more time for joining us from today's call and well look forward to seeing you check and farther with hopefully even better results. So wishing everybody a very good day.
And excuse me and we do have a question that just came in and that is coming from the line of Earth are actually very pleased with Zuma capital.
Please go ahead with your question.
Hi, Thanks for the time today, just show them on your true for guidance and you mentioned, it's going to be smart true up.
ER slightly in terms of revenue can you comment on the EBITDA I mean, given that I think historically your true what cost and social higher expense wall. So you have to achieve very pretty strong growth in true story, just wonder what we should be expecting from Q4 and I guess the second question and you know no.
I understand and about 400, and not coming back here and Oh, there's a new or birthrate and do a true and other.
Ah extra ordinary items, that's been happening this year, but if you can exclude all those factors and we lead story told and told me and weren't 22, what should we be expecting and drill and normalized growth in revenue and EBITDA going forward.
And so maybe on to talk with us and and just I guess quote unquote normalized growth I think Ah Ah why we expect.
Except to see flat, there's younger and growth and then Q School I think we had and he explained that or something and then came from the fact that we Daddy EPS from season. This year. So no effective business I guess, a special cobot impact however.
We do expect them to EBITDA growth momentum to continue out. This has been a reasonable early and you put that matches you implemented a index will we'd be well you know it will be good obviously, yet finalized I remember back in terms of just and momentum and growth rate or range of growth way and that would be.
And should be consistent with what we saw and Q3.
And secondly, I think and so I guess quote unquote normalized growth I think we presented to true up on the and.
The slide that shows basically all our growth rate like specialty I think if you exclude pediatric and obstetrics all growth rate and the mid teens and brought from 15% to 16% and if you exclude obviously decline and or ex that that growth rate and so the.
Increase.
He thought well, we think that revenues and tackled a cold and and because of Kobe, obviously, I forgot and not getting sick and there's no two season. So the good news, though and book insecticide revenues impacted and secondly, I think I'm, often offset success as it will be impacted this year or not well and this is that true.
Yeah from out I'm, just trying to see if the logo for full child, good and therefore, no. This book, which I'm not be so true even successful site growth example, PCL growth rate would be no significantly higher and because of that and the same to price one ex that stops and to return to China.
Right now ex that revenue steward and and.
I would free and hopefully no vaccine and Baltic controls and what we like.
And we expect to see that number and contribute positively to trail revenue growth.
Oh I'm sorry, so you finally, Oh tourism business did you want to hear from minor it's true to say between therapy or pediatric going to new to this rule and then also turn back the ex that from negative coupons or.
I.
I mean, you do care and let me look you know old and not sure I'd be expect and you're like a 25 per some pumps group and records I mean, I don't know the exact number book or just kind of it and route over and above so I think enough.
Yeah. So I think if you look at revenue, excluding obstetrics and pediatric.
And.
Oh growth is about 16% and then during Q3.
And ex that declined by 8%. So that's all revenues exclude ex that will be about 11% and so I think that.
Correct. So if you if you do exclude.
And that obstetrics and pediatrics and ex that obviously the growth number would look you know substantially higher because.
Because of these I guess cold and related.
Understood and then sorry, just on the dual listing and I'm sure I could and.
You're quite clearly, but did you say 2021, but did you say, which quarter, which ones and the ones I mean market. Its obviously pretty good right. So I'm not sure and why now.
And you cannot quote unquote appropriate market timing I mean, do you want to get some more cash from its possible.
Yeah, Yeah, no I think what we're obviously pushing this flow as quickly as possible ideally, we obviously because the spectrum entry was down $10 per share. Our hope is that if we do a secondary listing will be at least that share price as well and we believe that we're very very close and so but that's not the determining factor though.
Whether or not to go ahead with the secondary listing for obvious reasons, but.
And our intention is and also what they should do go ahead as quickly as we can and so that's been happening in the back.
Understood and sorry, the instead of the one that's question so say like your revenue growth is.
Going to actually and I mean, I'm quite sure I'd be expecting bench and you can talk real quick and Youre sitting from calls from brothers and talking to you might look at towards 21 to $1.22 sure day, Good top line square and bark anybody's 50 per cent or should I be expecting and for your EBITDA.
As such and you can anyone.
And and 22 and two.
But I think the best number three so to publicly feature set of projection that we gave out at the end of last year and and that's the direction. We provided no guidance on that and that that EPS was margin by facility.
Now that the direction and it's probably sue and accurate as it can be however, well hopefully that will yet be high given the impact of to cope with and so so I think and obviously without I'm doing more I'll be do you have any updates it out a long term projection on the basis of that.
However, I think somebody from them.
Our two companies so to any specific numbers I think those would probably eat and most accurate.
And we'll probably be about you happy and yeah, I guess the always the other way to look at it is if you run rate Q3.
Probably in line with what we previously in terms of EBITDA and putting reasonably close to what we previously disclosed for 22 and she now that obvious you know whats and although no one off and others.
However, next year it really depends on the B copy of obstetrics and no pediatric EPS wells kind of other ex that businesses and must be copy and school bus. That's we hope and then we do have a good opportunity to get or close to what we previously guided.
Got it thank you.
Thank you. This will conclude today's conference. Thank you for your participation.