Rhoen Klinikum AG

XETRA:RHK

Earnings Call Transcript 2021-Q3

[Operator]

Welcome to the conference call of RHÖN-KLINIKUM regarding the results of 9M 2021 and financial year 2020. The conference will be hosted by Dr. Stefan Stranz, CFO of RHÖN-KLINIKUM AG; Igor Levit, Group Head of Finance, Accounting, Tax Controlling and Investor Relations; and Julian Schmitt, Head of Investor Relations and Treasury.I now hand over to Julian Schmitt. Please go ahead.

[Julian Schmitt, Head of Investor Relations & Treasury]

Thanks. Dear investors and analysts, a warm welcome to everybody who has dialed in today. Our CFO, Dr. Stefan Stranz, will guide you through today's presentation. Dr. Stranz will begin with the key aspect of 2021. Afterwards, he will share with you our financial figures and guide you through our outlook for 2021. As always, we will close the conference call after a Q&A session.Before we start, and according to the usual practice, I'd like to draw your attention to the forward-looking statements and disclaimer wording on Page 2 of our presentation. This safe harbor language applies to the presentation, our guidance and all comments to be made today. Again, I'd like to mention that everything will be recorded. After the call, a replay will be available on our website.And with that, I hand it over to Stefan.

[Stefan Stranz, CFO & Member of Management Board]

Thank you. Welcome to everybody from my side. Please jump straightaway to Slide 3, and let me mention the key aspects of the first 9 months of financial year 2021 together with some strategic stuff. The fourth wave of the COVID-19 pandemic at first seems to be more moderate than the previous pandemic phases. In the meantime, however, we are experiencing an exponential increase in infection which, together with the seasonal spectrum of diseases, may lead to a substantial worsening of the situation in the hospitals. Yet unlike at the beginning of the pandemic, we are taking advantage of extensive experience in the treatment of COVID-19 patients and hope for well manageable courses of the disease due to the current vaccination rate.At the same time, we note that the further increase in the vaccinations rate combined with the so-called booster vaccinations and the consistent implementation of the COVID-19 access restrictions is essential to break the fourth wave. The current situation at our clinics gives us confidence and allows us to continue to provide a high level of care for non-COVID patients. The corresponding development is reflected in both our figures for the first 9 months and our outlook for the year -- for the full year 2021.Despite all our confidence, however, we have a state that deserves less and outstanding commitment of your employees over the period of now, 1.5 year similar to the trends seen nationally, it's resulting in increased exhausting of medical staff. Filing locations is providing difficult to the current labor market situation. Hence, we see our most urgent task strategically in the follow areas of action. Focused in strengthening nursing and medical care, concentrated on the clinical core activities and pooling special know-how. We are tackling these tasks together with our employees and are benefiting from cooperation with our companies of the Asklepios Group.Furthermore, we expressly welcome to desire of the exploratory coalition partners, SPD, Die Grünen/Bündnis 90 and FDP to make preventive care and prevention the guide principle of health policy. The basic idea of more cross-sector cooperation is reasonable but should entail a radical softening of sectoral boundaries, especially between outpatient and inpatient care. Besides it, we are currently missing solutions for eliminating the considerable investment backlog of the German health care sector and exploratory political partners to explicitly address this issue. Investments in digitalization make good sense and are inevitable, but cannot be an end in itself. The German health care industry urgently need significantly more investment in building infrastructure and medical technology. Violation of this principle of dual financing may no longer be tolerated in the future. Instead, effective sanction mechanisms are needed. Saying this clear message to the politicians, I'd like to move to the next slide, your P&L statement. Compared to the same period of the previous year, we recorded a 1.2% increase in revenue. EBITDA improved by 16.9% to EUR 71.1 million. Consolidated profit amounting to EUR 15.5 million and was EUR 13.2 million higher than in the previous year. Revenues for the first 9 months of the financial year 2021 included EUR 40.3 million of income related to the COVID-19 legislation. This mainly involves revenues in connections with control sanctions -- payments for the bed capacity that has been kept available. They expired on 15 June in 2021. Let me now to bring the key effectors of financial year 2020, which we are obligated to report it back to your mind so that we can also allow questions about the following in this call. In 2020, we reported, one, year-on-year decrease in EBITDA of EUR 45.1 million to EUR 80.2 million, a decrease in EBIT of EUR 46.2 million to EUR 10.6 million and a decrease in consolidated profit of EUR 42 million to EUR 2.5 million, with revenues up EUR 56.2 million to EUR 1,360.2 million. It should be noted that the figures of...[Technical Difficulty] Okay. We start it again. It should be note that the figures of 2020 are only comparable with the prior period year and to a limited extent. The year 2020 was very impacted by COVID-19. The decreasing in the number of patients was offset by revenues totaling EUR 90.6 million as a result of the COVID-19 legislation.EBITDA of 2019 includes nonrecurring positive effects EUR 39.2 million from the reversal of provision for legal and tax risk and EUR 6.9 million from the agreement to compensation for university outpatient clinic. This brings me to the next slide for today, your balance sheet end as of 30th September 2021. When we take a look at our balance sheet, there is nothing but new but stable figures to report, should we continue to have a solid and substantial balance sheet. Your equity ratio was round about 73%, is among the highest return in the industry.This ultimately leads to the next page, our financial outlook. Due to positive development of the business in the first 9 months of financial year 2021, the management board of RHÖN-KLINIKUM decided to adjust the current EBITDA guidance for financial year 2021. The current guidance accounted for an EBITDA range between EUR 72.5 million to EUR 82.5 million. For the financial year 2021, the management board now expected an EBITDA between EUR 92 million to EUR 102 million.At the same time, the guidance of revenues in the amount of EUR 1.4 billion within the range of plus and minus 5% remains unchanged. The guidance reflects the regulatory legacy intervention, such the German regulations for the threshold of nursing staff, German Pflegepersonaluntergrenzen-Verordung; and German nursing staff reinforcement act, German Pflegepersonal-Stärkungsgesetz, which we have become even tighter. In addition, it should be note that the guidance is subject to uncertainty in connecting with the courses of the COVID-19 pandemic and any regulation legislation affecting the remuneration structure in 2021.Thank you for your listening so far, and we are now happy to ask your answer for the questions.

[Operator]

[Operator Instructions] And we have not received any questions at this point. I will hand back to the speakers.

[Julian Schmitt, Head of Investor Relations & Treasury]

Thank you. Thank you very much for joining our today's analyst meeting. As there are no questions, we will answer them afterwards. So if you have any further questions, please do not hesitate to get in touch. Investor Relations is happy to answer your questions. We look forward to hear from you now. Thank you. Bye-bye.

[Operator]

Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.