Review of reporting "Mother and Child" for the first half of the year 2021 of the year

Обзор отчетности «мать и дитя» за первое полугодие 2021 года

MD Medical Group Investments (LSE, MOEX: MDMG) - the holding company of one of the largest Russian networks of private medical clinics "Mother and Child". FROM 9 November 2020, the company's shares began trading on the Moscow Exchange.

6 September the company released financial statements for the first half of 2021, which has shown strong operating and financial results.

Operating indicators

The number of delivered deliveries in clinics increased by 10% and amounted to 4 thousand compared to 3.7 thousand births in the first half of 2020. The main drivers were the increase in the birth rate in Russia and the possibility of childbirth in specialized hospitals for patients with coronavirus.

The number of IVF cycles increased by 41% and amounted to 8.1 thousand cycles compared to 5.8 thousand cycles a year earlier. The growth factors were the implementation of the deferred demand for IVF due to coronavirus and the continuing growth in the popularity of IVF in Russia, which is at a low level compared to developed countries.

The number of bed-days in the first half of the year amounted to 76.2 thousand - an increase of 49% in relation to the same period a year earlier. One of the reasons is the expansion of the list of services in private hospitals and the increase in capacity. In February, a new building "Lapino-4" was opened in the medical cluster "Lapino" for the treatment of patients with coronavirus infection.

The total outpatient attendance increased by 23% and amounted to 897.3 thousand visits: the list of services has expanded and the capacity utilization has increased.

The company divides outpatient visits into three segments:

  • obstetrics and gynecology: 280,4 thousands of visits, growth by 10%;
  • pediatrics: 213,2 thousands of visits, growth by 28%;
  • other medical services: 403,5 thousands of visits, growth by 31%.

Over the past year, "Mother and Child" has been actively diversifying its business - both by expanding into regions, and through expanding the portfolio of medical services.

The growth of revenue in previously non-core areas amounted to 212% in oncology, 121% in therapy, 124% in other medical proceeds, 79% in physiotherapy, 54% in surgery and cardiology.

The company attaches a special role to the growing demand for cancer care: actively expands the oncology service and invests in the growth of the capacity of oncology departments in all its hospitals.

Scope of services rendered, things

201920201п20201п2021Growth in 1H2021
Childbirth744677593669402710%
ECO18 00415 2645797815441%
Bed days79 689116 41751 24276 19649%
Outpatient visits1 745 1331 613 630729 081897 39623%

Loading of medical facilities of the Mother and Child Group in Moscow

1п20201п2021
Childbirth67%67%
ECO45%59%
Bed days85%70%
Outpatient visits42%46%

Loading of medical facilities of the Mother and Child Group of Companies in the regions

1п20201п2021
Childbirth38%45%
ECO30%44%
Bed days42%54%
Outpatient visits38%45%

Financial performance

Revenue for the first half of the year increased by 51%, to 12 009 million rubles, compared to 7,974 million rubles for the same period in 2020.

40% of the company's revenue is in the segment of women's and children's health: obstetrics and gynecology, childbirth and IVF. But other segments are growing faster.

The revenue structure for the first half of 2021 and 2020 is as follows:

Revenue structure, million rubles

1п20201п2021The changeShare in 1H2021
Therapy, surgery and other inpatient services13162566+95%21%
Laboratory tests, diagnostics and other14762352+59%20%
obstetrics and gynecology13761571+14%13%
Childbirth11481340+17%11%
ECO13461908+42%16%
Pediatrics8101032+27%9%
Oncology3291027+212%9%
Other revenue173213+23%2%

Gross profit increased by 71% and amounted to 4550 million rubles. Gross profit margin increased by 4,5 percentage points and amounted to 37,9%.

EBITDA increased by 66% and amounted to 3777 million rubles. The growth is due to the rapid growth in the volume of services and the average check in relation to costs. EBITDA margin was 31,5% - growth by 3 percentage points.

Net profit increased by 83% and amounted to 2688 million rubles. Net profit margin was 22,3% - it's on 3 percentage points more than a year earlier.

In the wake of improved performance, the company announced an investment program in the amount of 12 billion rubles for 2021-2024. The money will go to expand the Lapino medical cluster with new buildings of the Lapino-3 nuclear medical center and the Lapino-5 neuropsychiatric center, construction of three new hospitals in Domodedovo, Petersburg and Tyumen, expansion of the outpatient network, including continued expansion in the market for receiving laboratory tests.

Remarkably, that the company plans to implement the entire program without external funding. This is a logical decision during a period of growth in the key rate of the Central Bank of the Russian Federation., and also due to the large supply of money in the accounts: they need to be invested effectively.

Dynamics of indicators, million rubles

201920201п20201п2021Growth in 1H2021
Revenue16 16019 133797412 00951%
Gross profit578471272663455071%
EBITDA463560082270377766%
Net profit278743331471268883%
Net cash flow988273711803012155%

Profitability indicators

201920201п20201п2021Growth in 1H2021
Gross profit36%37%33%38%4%
EBITDA29%31%28%31%3%
Net profit17%23%18%22%4%

Debts and dividends

The financial position of the company is extremely stable. Net debt decreased by 33% and amounted to 1,835 million rubles. The indicator "net debt / EBITDA "is at a record low level in recent years and is 0,2. This is a comfortable level of debt burden: cash flow will go to promising investment projects, not to pay off debts.

In 2022, the Mother and Child Group of Companies will have to pay off almost 1,914 million rubles of debt. This is not critical: net cash flow even for half of 2021 will be more than enough. This will not significantly affect dividends either.: by the end of the first half of the year, the company will pay 1,352 million rubles to shareholders, or 18 P per share. The final dividend yield for 2021 will be more than 4%.

Since 2019, the amount of dividends is 50% from net profit. According to SEO, this payout ratio is planned to be maintained in the future.

What is the bottom line

"Mother and Child" is a sustainable business with high margins, who will suffer the least during the crisis. The main potential for its further growth is the development of high-tech medical services. The population requires a higher level and service of public medicine in oncology, rehabilitation and laboratory diagnostics.

The average check for basic services of the company has been steadily growing since 2018, as in Moscow, and in the regions. Changes are taking place in favor of complex medical procedures, the number of services per visit to the doctor also increases.

Given the large stock of loading of medical facilities, active expansion into the regions and consolidation of the private medicine market, the company has to meet a significant share of demand.

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