INTEGRATED DIAGNOSTICS HOLDINGS PLC FY 2022 PRELIMINARY ANNOUNCEMENT
Cairo and London | 6 April 2023
Integrated Diagnostics Holdings Plc
FY 2022 Results
Thursday, 6 April 2023
Integrated Diagnostics Holdings Plc concludes 2022 reporting solid 18% growth in non-Covid revenues
(Cairo and London) - Integrated Diagnostics Holdings ("IDH," "the Group," or "the Company"), a leading consumer healthcare company with operations in Egypt, Jordan, Nigeria and Sudan, released today its audited financial statements and operational performance for the year ended 31 December 2022, reporting revenue of EGP 3,605 million, 31% below the figure recorded in the previous year. Revenues were supported by a sustained expansion in the Company's conventional1 (non-Covid) offering (81% of the consolidated figure), which recorded a strong 18% year- on-year rise in FY 2022, in part outweighing the anticipated drop in Covid-19-related2 revenues throughout the year.
Growth of IDH's conventional business was dual driven as both conventional tests performed and average revenue per conventional test expanded a solid 9% each versus the previous year. IDH reported net profit for the year of EGP 527 million, with an associated margin of 15%. Adjusting for the losses resulting from transactions completed by the Company to secure the USD balance needed to fulfil its FY 2021 dividend obligations to shareholders and the one-off item related to Pakistan transaction fees, the Group would have recorded a net profit of EGP 692 million in FY 2022, with a margin on revenue of 19%.
On a quarterly basis, conventional revenues recorded EGP 780 million in Q4 2022, a 31% year-on-year expansion, significantly outpacing the year-on-year growth recorded last quarter and signalling once again the underlying strength of the Group's conventional business.
It is important to note that information in relation to the Company's full year results has been extracted from our audited annual report. Meanwhile, disclosures and statements in respect of quarterly information are unaudited.
Financial Results (IFRS)
EGP mn
Q4 2021 | Q4 2022 | Change |
FY 2021 | FY 2022 | Change |
Revenues | 1,458 | 805 | 45% | 5,225 | 3,605 | -31% |
Conventional Revenues | 597 | 780 | 31% | 2,452 | 2,903 | 18% |
Covid-19-related Revenues | 862 | 24 | -97% | 2,773 | 702 | -75% |
Cost of Sales | (821) | (524) | -36% | (2,421) | (2,143) | -11% |
Gross Profit | 638 | 281 | -56% | 2,804 | 1,462 | -48% |
Gross Profit Margin | 44% | 35% | -9 pts | 54% | 41% | -13 pts |
Operating Profit | 468 | 106 | -77% | 2,291 | 854 | -63% |
EBITDA3 | 537 | 175 | -67% | 2,501 | 1,150 | -54% |
Adjusted EBITDA4 | 537 | 197 | -63% | 2,530 | 1,172 | -54% |
Adjusted EBITDA Margin | 37% | 25% | -12 pts | 48% | 33% | -15 pts |
Net Profit | 345 | 123 | -64% | 1,493 | 527 | -65% |
Net Profit Margin | 24% | 15% | -9 pts | 29% | 15% | -14 pts |
Cash Balance
2,350 | 816 | -65% |
2,350 | 816 | -65% |
Note (1): Throughout the document, percentage changes between reporting periods are calculated using the exact value (as per the Consolidated Financials) and not the corresponding rounded figure.
Key Operational Indicators5
FY 2021 | FY 2022 | Change | |
Branches | 502 | 552 | 50 |
Patients ('000) | 10,317 | 8,721 | -15% |
Net Sales per Patient (EGP) | 489 | 406 | -17% |
Tests ('000) | 33,659 | 32,685 | -3% |
Conventional Tests ('000) | 28,542 | 30,985 | 9% |
Covid-19-related Tests ('000) | 5,117 | 1,700 | -67% |
Net Sales per Test | 150 | 108 | -28% |
Net Sales per Conventional Test (EGP) | 86 | 94 | 9% |
Net Sales per Covid-19-related Test (EGP) | 507 | 376 | -26% |
Test per Patient | 3.3 | 3.7 | 15% |
- Conventional (non-Covid) tests include all of the Group's test offering with the exception of its Covid-19-related test offering outlined below.
- Covid-19-relatedtests include both core Covid-19 tests (Polymerase Chain Reaction (PCR), Antigen, and Antibody) as well as other routine inflammatory and clotting markers including, but not limited to, Complete Blood Picture, Erythrocyte Sedimentation Rate (ESR), D-Dimer, Ferritin and C-reactive Protein (CRP), which the Company opted to include in the classification as "other Covid-19-related tests" due to the strong rise in demand for these tests witnessed following the outbreak of Covid-19.
- EBITDA is calculated as operating profit plus depreciation and amortization.
- Adjusted EBITDA is calculated as EBITDA excluding one-off expenses incurred by the Group.
- Key operational indicators are calculated based on net sales for the year of EGP 3,542 million. More details on the difference between net sales and total revenues is available below.
Integrated Diagnostics Holdings plc 1
FY 2022 PRELIMINARY ANNOUNCEMENT
Cairo and London | 6 April 2023
Important Notice: Treatment of Revenue Sharing Agreements and Use of Alternative Performance Measures (APM)
As part of IDH's efforts to support local authorities in Jordan in the fight against the pandemic, Biolab (IDH's Jordanian subsidiary) secured several revenue-sharing agreements to operate testing stations, primarily dedicated to PCR testing for Covid-19, in multiple locations across the country including Queen Alia International Airport (QAIA) and Aqaba Port. These agreements kicked off in May 2021 at Aqaba Port and in August 2021 at QAIA. However, following the decision by Jordanian authorities on 1 March 2022 to end mandatory testing, testing booths across both locations recorded sharp declines in patient traffic.
Under these agreements, Biolab received the full revenue (gross sales) for each test performed and paid a proportion to QAIA (38% of gross sales excluding sales tax) and Aqaba Port (36% of gross sales) as concession fees to operate in the facilities, thus effectively earning the net of these amounts (net sales) for each test supplied. Starting in Q4 2021, the treatment of these agreements was altered in accordance with IFRS 15 paragraph B34, which considers Biolab as a Principal (and not an Agent). Subsequently, revenues generated from these agreements are reported in the Consolidated Financial Statements as gross (inclusive of concession fees) and the fees paid to QAIA and Aqaba Port are reported as a separate line item in the direct cost. It is important to note that sales generated from these agreements were reflected on the Company's results in Q1 2022 only as the agreements were terminated at the end of the first quarter of 2022.
In an effort to present an accurate picture of IDH's performance for the twelve-month period ended 31 December 2022, throughout the report management utilizes net sales of EGP 3,542 million for FY 2022 (IFRS revenues stand at EGP 3,605 million for the twelve-month period). Net sales for the twelve-month period ended 31 December 2022 are calculated as total gross revenues excluding concession fees and sales taxes paid as part of Biolab's revenue sharing agreements with QAIA and Aqaba Port. This is a similar approach taken by IDH in the Company's FY 2021 Results Announcement.
It is worth nothing that following the reduction in activity, net sales will not be reported as an APM in 2023.
It is important to note that aside from revenue and cost of sales, all other figures related to gross profit, operating profit, EBITDA, and net profit are identical in the APM and IFRS calculations. However, the margins related to the aforementioned items differ between the two sets of performance indicators due to the use of Net Sales in the APM calculations and the use of Revenues for the IFRS calculations.
Adjustments Breakdown
EGP mn
Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 |
FY 2022
Net Sales | 1,117 | 774 | 846 | 805 | 3,542 |
QAIA and Aqaba Port Concession Fees | 63 | 0 | 0 | 0 | 63 |
Revenues | 1,180 | 774 | 846 | 805 | 3,605 |
Cost of Net Sales | (586) | (473) | (497) | (524) | (2,080) |
Adjustment for QAIA, and Aqaba Port | (63) | (0) | (0) | (0) | (63) |
Agreements | |||||
Cost of Sales
(649) | (473) | (497) | (524) |
(2,143)
Adjustments by Country
EGP mn
FY 2022 (IFRS) | FY 2022 (APM) |
Egypt | 2,894 | 2,894 |
Jordan | 612 | 549 |
Nigeria | 79 | 79 |
Sudan | 20 | 20 |
Group total
3,6053,542
Note: differences between IFRS and APM figures are highlighted in grey.
Integrated Diagnostics Holdings plc 2
FY 2022 PRELIMINARY ANNOUNCEMENT
Cairo and London | 6 April 2023
Alternative Performance Measures (APM)
EGP mn
Q4 2021 | Q4 2022 | Change |
FY 2021 | FY 2022 | Change |
Net Sales | 1,281 | 805 | -37% | 5,048 | 3,542 | -30% | ||||||||
Conventional Revenue | 597 | 780 | 31% | 2,452 | 2,903 | 18% | ||||||||
Covid-19-related Net Sales | 684 | 24 | -96% | 2,596 | 639 | -75% | ||||||||
Cost of Net Sales | (644) | (524) | -19% | (2,244) | (2,080) | -7% | ||||||||
Gross Profit | 638 | 281 | -56% | 2,804 | 1,462 | -48% | ||||||||
Gross Profit Margin on Revenue | 50% | 35% | -15 pts | 54% | 41% | -13 pts | ||||||||
Gross Profit Margin on Net Sales6 | 50% | 35% | -15 pts | 56% | 41% | -15 pts | ||||||||
Operating Profit | 468 | 106 | -77% | 2,291 | 854 | -63% | ||||||||
EBITDA7 | 537 | 175 | -67% | 2,501 | 1,150 | -54% | ||||||||
Adjusted EBITDA8 | 537 | 197 | -63% | 2,530 | 1,172 | -54% | ||||||||
Adjusted EBITDA Margin on Revenue | 42% | 25% | -17 pts | 48% | 33% | -15 pts | ||||||||
Adjusted EBITDA Margin on Net Sales | 42% | 25% | -17 pts | 50% | 33% | -17 pts | ||||||||
Net Profit | 345 | 123 | -64% | 1,493 | 527 | -65% | ||||||||
Net Profit Margin on Revenue | 27% | 15% | -12 pts | 29% | 15% | -14 pts | ||||||||
Net Profit Margin on Net Sales | 27% | 15% | -12 pts | 30% | 15% | -15 pts |
Cash Balance
2,350 | 816 | -65% |
2,350 | 816 | -65% |
Note: differences between IFRS and APM figures are highlighted in grey.
- Gross profit, EBITDA, and net profit margins are calculated on net sales for APM in both periods.
- EBITDA is calculated as operating profit plus depreciation and amortization.
- Adjusted EBITDA is calculated as EBITDA excluding one-off expenses incurred by the Group. These include one-off listing expenses in FY 2021 of EGP 29.0 million related to IDH's dual listing on the EGX, and one-off transaction expenses in FY 2022 of EGP 22.3 million related to IDH's aborted acquisition in Pakistan. Adjusted measures eliminate the one-off impacts of items in the year to provide a measure of underlying performance which is regularly utilized by management.
Integrated Diagnostics Holdings plc 3
FY 2022 PRELIMINARY ANNOUNCEMENT
Cairo and London | 6 April 2023
Important notice: The analysis provided in this section presents both APM measures and IFRS comparisons when
necessary. A reconciliation between IFRS and APM measures is provided earlier in this announcement.
Introduction
- Financial Highlights
- Conventional9 Revenue (81% of consolidated revenue in FY 2022 and which includes IDH's full test offering except for Covid-19-related tests) posted robust growth on the back of a continued normalisation of patient traffic post-Covid-19, and supporting consolidated net sales for FY 2022 which were otherwise weighed down by a rapid decline in Covid-19-related business. Conventional revenue expanded 18% year-on-year to EGP 2,903 million in FY 2022, driven by a 9% year-on-year increase in both conventional test volumes and average revenue per test. On a quarterly basis, conventional revenue delivered an impressive 31% year-on-year expansion to EGP 780 million, supported by a 12% year-on-year increase in test volumes and a 16% rise in average revenue per test (in part due to the post-devaluation translation effect).
- Simultaneously, and in line with the Company's expectations, Covid-19-related10 revenues (19% of consolidated revenue in FY 2022) recorded EGP 702 million in 2022, down 75% year-on-year. Similarly, Covid- 19-relatednet sales declined sharply, contracting by 75% year-on-year to EGP 639 million in FY 2022. The decline reflected a widespread fall in infection rates, the lifting of government regulations on mandatory testing, as well as a reduction in the average price of PCR and Antigen tests. On a quarterly basis, IDH booked only EGP 24 million in Covid-19-related revenue (identical to net sales) in Q4 2022, down 96% year-on-year.
- Consolidated revenue declined 31% year-on-year to record EGP 3,605 million in 2022. Meanwhile, consolidated net sales recorded EGP 3,542 million during FY 2022, a 30% year-on-year contraction. The decline wholly reflects the fall in Covid-19-related business which had boosted consolidated results in FY 2021. Lower Covid-19-related revenues were partially offset by the strong growth in conventional revenues. On a quarterly basis, consolidated revenues (identical to net sales) declined 37% year-on-year to reach EGP 805 million.
Net Sales Progression | Test Volumes Progression |
(EGP mn) | (mn) |
+33% Growth in Conventional Net Sales
5,048
3,542 | |
2,656 | 2,596 |
639 | |
650 | 28.0 |
2,179 2,007 2,452 2,903
+11% Growth in Conventional Test Volumes
33.6 | 32.7 | |
27.0 | 5.1 | 1.7 |
2.1 | ||
24.9 | 28.5 | 31.0 |
FY 2019* | FY 2020 | FY 2021 | FY 2022 | FY 2019* | FY 2020 | FY 2021 | FY 2022 | ||
Conventional | Covid-19-related | Conventional | Covid-19-related | ||||||
*FY 2019 exclude net sales and test volumes generated as part of the Group's contribution to the Egyptian government's 100 Million Healthy Lives campaign which ran from November 2018 to June 2019.
- Gross Profit recorded EGP 1,462 million for FY 2022, down 48% year-on-year from the EGP 2,804 million recorded in FY 2021. Gross profit margin on revenue and net sales recorded 41% in FY 2022 versus a margin of 54% on revenue and 56% on net sales in FY 2021. Lower gross profitability principally reflects a normalisation of margins following the year-on-year decline in Covid-19-related business which had significantly boosted net sales and profitability in FY 2021. Gross profitability was also in part weighed down by an increase in direct salaries and wages (related to additional staffing requirements for the 50 new branches and annual salary increases for existing employees), higher direct depreciation expenses on new branch additions, and a slight increase in raw material prices in the second half of the year (reflecting the devaluation of the Egyptian pound throughout the year). In Q4 2022, gross profit recorded EGP 281 million, down 56% year-on-year primarily reflecting the reduction in the significantly higher margin achieved by IDH's
- Conventional (non-Covid) tests include IDH's full service offering excluding the Covid-19 related tests outlined below.
- Covid-19-relatedtests include both core Covid-19 tests (Polymerase Chain Reaction (PCR), Antigen, and Antibody) as well as other routine inflammatory and clotting markers including, but not limited to, Complete Blood Picture, Erythrocyte Sedimentation Rate (ESR), D-Dimer, Ferritin and C-reactive Protein (CRP), which the Company opted to include in the classification as "other Covid-19-related tests" due to the strong rise in demand for these tests witnessed following the outbreak of Covid-19.
Integrated Diagnostics Holdings plc 4
FY 2022 PRELIMINARY ANNOUNCEMENT
Cairo and London | 6 April 2023
Covid-19-related business in FY 2021 and similar reasons to those driving full-year gross profitability. Gross profit margin on revenue (identical to net sales) recorded 35% in Q4 2022.
- EBITDA11 recorded EGP 1,150 million in 2022, down 54% from the EGP 2,501 million recorded last year. EBITDA margin on revenue and net sales both stood at 32% for the year. Meanwhile, Adjusted EBITDA,12 which adjusts for non-recurring expenses incurred by IDH in 2021 and 2022, came in at EGP 1,172 million in FY 2022, representing a 54% year-on-year decrease. Adjusted EBITDA margin on revenue recorded 33% in 2022 from 48% last year. Meanwhile, Adjusted EBITDA margin on net sales of 33% versus 50% in FY 2021. The decline is attributable to lower gross profitability for the year coupled with an increase in SG&A expenses, primarily related to increased marketing activities to support new branch roll outs, and the launch of a new patient loyalty programme. In Q4 2022, EBITDA recorded EGP 197 million, down 63% year-on-year and with an associated margin on revenue (identical to net sales) of 25%.
- Net Profit recorded EGP 527 million for FY 2022, down 65% year-on-year. Net profit margin on revenue normalised following the exceptional profitability recorded throughout FY 2021, recording 15% in FY 2022 from 29% in FY 2021. Similarly, net profit margin on net sales recorded 15% in FY 2022 versus 30% in the year prior. It is important to note that adjusting for the losses resulting from transactions completed by the Company to secure the USD balance needed to fulfil its FY 2021 dividend obligations to shareholders and transaction cost related to Pakistan transaction,13 the Group would have recorded a net profit of EGP 692 million in FY 2022, with a margin on revenue of 19% and on net sales of 20%. In Q4 2022, net profit recorded EGP 123 million, down 64% year-on-year and with a margin on revenue (identical to net sales) of 15%.
- Earnings per share stood at EGP 0.90 in FY 2022 compared to EGP 2.35 in FY 2021.
- Operational Highlights
- IDH's revenue generating branch network reached 552 branches as of 31 December 2022, an increase of 50 branches from the 502 branches recorded as of 31 December 2021.
- Conventional tests14 recorded 31.0 million during FY 2022, a robust 9% year-on-year increase. The strong increase in conventional tests partially offset the 67% year-on-year decrease in Covid-19-related tests, which dropped to 1.7 million for FY 2022. Finally, total tests performed fell 3% year-on-year to 32.7 million tests.
- Average net revenue per conventional test increased a solid 9% year-on-year in FY 2022 to reach EGP 94. Meanwhile, net revenue per Covid-19-related test declined 26% year-on-year on the back of a significant drop in the selling prices of PCR and Antigen tests. As such, IDH's total average net revenue per test dropped 28% year-on-year to record EGP 108 in FY 2022.
- Total patients served by IDH throughout the year recorded 8.7 million, a 15% year-on-year decline from the
10.3 million patients served in FY 2021. Meanwhile, the Group's tests per patient metric increased to 3.7 in FY 2022 from 3.3 in FY 2021. The drop in total patient volumes and the simultaneous increase in tests per patient metric during FY 2022 both reflect the decrease in Covid-19-related patients (who typically visited IDH's branches for single Covid-19 tests) and the normalisation in conventional patient traffic (who typically visit the Group's branches for multiple tests). - Across both Egypt and Jordan (80.3% and 16.9% of consolidated revenues in FY 2022), IDH continued to record sustained growth in conventional revenue as both test volumes and average revenue per conventional test increased versus the previous year. In Egypt conventional revenue expanded 16% year-on-year, while in Jordan conventional revenue was up 29% in EGP terms and 2% in JOD terms. This partially offset a fall in Covid- 19-related business.
- In Nigeria (2.2% of consolidated net sales in FY 2022), IDH continued to record robust revenue growth (up 47% year-on-year in EGP terms and 24% in NGN terms) supported by an increasingly favourable test mix and higher test volumes. Despite this, Echo-Lab's profitability continued to be impacted by rising diesel prices.
- In Sudan (0.6% of consolidated net sales in FY 2022), IDH recorded solid growth in both SDG and EGP terms, supported by rising test prices.
- EBITDA is calculated as operating profit plus depreciation and amortization.
- Adjusted EBITDA is calculated as EBITDA excluding one-off expenses incurred by the Group.
- In December 2021, the Company signed a sale and purchase agreement to acquire 50% shareholding in Base Consultancy FZ LLC, the holding company of Islamabad Diagnostic Centre
("IDC"). While the original SPA, expired on 29 August 2022, IDH and the Seller continued negotiations aimed at concluding a transaction on modified terms. Despite the efforts of the parties, extensive delays in the regulatory review process, the challenging global economic environment and the condition precedent related to repatriating funds, have resulted in the discontinuation in January 2023 of negotiations towards completing the transaction. - Covid-19-relatedtests include both core Covid-19 tests (Polymerase Chain Reaction (PCR), Antigen, and Antibody) as well as other routine inflammatory and clotting markers including, but not limited to, Complete Blood Picture, Erythrocyte Sedimentation Rate (ESR), D-Dimer, Ferritin and C-reactive Protein (CRP), which the Company opted to include in the classification as "other Covid-19-related tests" due to the strong rise in demand for these tests witnessed following the outbreak of Covid-19.
Integrated Diagnostics Holdings plc 5
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IDH - Integrated Diagnostics Holdings plc published this content on 06 April 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 06 April 2023 07:13:02 UTC.
