MD Medical Group reports growth of all key operational results and revenue in FY 2019

5 February 2020, Moscow – MD Medical Group Investments Plc (“MD Medical Group”, “MDMG” or the “Company” – LSE: MDMG), a leading Russian private healthcare provider, today announces its operating and unaudited financial results for Q4 and FY 2019[1].

Key highlights for FY 2019:

• Total revenue increased 8% year-on-year (y-o-y) to RUB 16,160 mln;
• Total deliveries increased 2% y-o-y to 7,446. Revenue from deliveries increased 4% y-o-y to RUB 2,305 mln;
• Total IVF cycles increased 8% y-o-y to 18,004. Revenue from IVF increased 10% y-o-y to RUB 3,843 mln;
• Total in-patient treatments increased 14% y-o-y to 79,689. Revenue from in-patient treatments increased 19% y-o-y to RUB 3,046 mln;
• Total out-patient treatments increased 8% y-o-y to 1,745,133. Revenue from out-patient treatments increased 8% y-o-y to RUB 5,069 mln.

Mark Kurtser, CEO of MD Medical Group, said:

“Thanks to the hard work across the Group, we successfully completed 2019 by further boosting key operational results and revenue.

“In 2019, revenue grew by 8% year-on-year to RUB 16,160 mln, supported by continued growth of all the key operational indicators. The fastest growth – by 14% year-on-year – was demonstrated in the in-patient category, in large part due to the strong performance of the other medical services and paediatrics business lines. The number of IVF cycles and out-patient visits also demonstrated solid growth of 8% year-on-year.

“Our improved performance highlights the efficiency of our consistently implemented strategy and reflects the sustainable growth of the Company. In order to secure further growth, in the reporting year we completed the large-scale renovation of PMC, transforming it into a multi-disciplinary hospital. We also opened the Tyumen hospital along with a number of clinics, as well as continued the construction of the second building at the Lapino hospital, which is due to open in 2020.

“I am confident that our successful performance over the past year will serve as a foundation for our future growth.”

Key operational highlights for FY 2019:

Deliveries

• In FY 2019, total deliveries increased 2% y-o-y to 7,446. Key growth drivers were regional hospitals in Novosibirsk and Samara:

• Deliveries at the Novosibirsk clinical hospital grew 24% y-o-y;
• Deliveries at the Mother&Child Samara hospital grew 37% y-o-y.

• Total like-for-like (LFL) deliveries slightly decreased 1% y-o-y;
• Revenue from deliveries grew 4% y-o-y to RUB 2,305 mln, or 14% of the Group’s total revenue;
• The average check for deliveries amounted to RUB 405 thsd (up 6% y-o-y) in Moscow and the Moscow Region, and RUB 149 thsd in the regions (up 2% y-o-y).

IVF

• In FY 2019, total IVF cycles increased 8% y-o-y to 18,004. The slower growth rate in Q4 2019 was due to allocated MHI quotas being used up during the first nine months of the year. Cycles completed under the MHI programme accounted for 54% of the total number of cycles for FY 2019;

· Total LFL IVF cycles increased by 3% y-o-y to 17,073;

• Revenue from IVF grew 10% y-o-y to RUB 3,843 mln, or 24% of the Group’s total revenue;
• MHI services accounted for 36% of revenue from IVF, up 4 p.p. y-o-y;
• The average check for commercial IVF cycles increased by 5% y-o-y to RUB 300 thsd, while the average check for IVF cycles under MHI increased by 5% y-o-y to RUB 140 thsd.

In-patient treatments

• In FY 2019, total in-patient treatments grew by 14% y-o-y to 79,689 on the back of:
• A 12% increase in paediatric in-patient treatments;
• A 30% increase in in-patient days using other medical services;

Key growth drivers in the in-patient treatments segment were PMC (rebranded as MD Group Clinical Hospital) and the hospitals in Samara and Tyumen.

• Total LFL in-patient treatments grew by 5% y-o-y to 73,662;
• Revenue from in-patient treatments grew by 19% y-o-y to RUB 3,046 mln, or 19% of the Group’s total revenue;
• The average check for in-patient treatments amounted to RUB 49.0 thsd (up 1% y-o-y) in Moscow and the Moscow Region, and RUB 30.1 thsd in other regions (up 15% y-o-y).

Out-patient treatments

• In FY 2019, total out-patient treatments increased by 8% y-o-y to 1,745,133 on the back of:
• A 5% increase in OBGYN out-patient treatments;
• A 6% increase in paediatric out-patient treatments;
• A 11% increase in out-patient days using other medical services.
• Total LFL out-patient treatments grew by 4% y-o-y to 1,663,091;
• Revenue from out-patient treatments grew by 8% y-o-y to RUB 5,069 mln, or 31% of the Group’s total revenue. The hospitals and the Moscow clinics were key drivers of this growth;
• The average check for out-patient treatments amounted to RUB 2.9 thsd (flat y-o-y).

Revenue and average check

In FY 2019, total revenue grew 8% y-o-y (up RUB 1,223 mln y-o-y) to RUB 16,160 mln on the back of:

• A 4% increase in revenue from deliveries.
• A 10% increase in revenue from IVF.
• A 19% increase in revenue from in-patient treatments.
• An 8% increase in revenue from out-patient treatments.

The average check for key services in FY 2019 amounted to:

• RUB 310 thsd for deliveries, up 2% y-o-y:

Moscow and the Moscow Region – RUB 405 thsd.
Other regions – RUB 149 thsd.

• RUB 213 thsd for IVF, up 2% y-o-y.
• RUB 38.2 thsd for in-patient treatments, up 5% y-o-y.
• RUB 2.9 thsd for out-patient treatments, flat y-o-y.

Net debt

As of 31 December 2019, net debt increased by RUB 580 mln, or by 20%, compared to 31 December 2018, to RUB 3,530 mln. The increase in net debt was due to the impact the of the implementation of the IFRS 16 Standard for the first time with regards to leases which amounted to RUB 650 mln.

CAPEX

Total CAPEX in FY 2019 increased by 8% y-o-y to RUB 3,984 mln. Major investments included the construction of the Tyumen hospital, construction of Lapino-2 and renovation at PMC.

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