MD Medical Investments : Group Annual Report 2021

Advancing the excellence

of healthcare

ANNUAL

20 2 1

REPORT

Contents

STRATEGIC REPORT

• 4 Strong investment case

• 6 Strong sustainable growth

• 8 Multidisciplinary leadership

• 10 Financial overview in 2021

• 12 Nationwide healthcare network

• 14 Business model"Business

• 16 Delivering on our strategic goals

• 18 Continuous expansion to increase client base

• 20 Delivering a comprehensive high-tech healthcare

• 22 Expanding a leading nationwide network

• 24 Hospitals in Moscow

• 32 Out-patient Clinics in Moscow and Moscow Region

• 38 Hospitals in regions

• 44 Out-patient Clinics in regions

• 48 Shareholder's equity and report on dividend

CORPORATE GOVERNANCE

• 52 Corporate Governance Report

• 56 Risk management

• 60 Board of Directors

• 62 Reportof the board of directors

• 64 Management board

investment

Strong

ONE OF THE LARGEST HEALTHCARE COMPANIES IN RUSSIA

MDMG is the first publicly listed healthcare company in Russia operating in the emerging market of private medical services with possibilities for strong future growth.

CLEAR

AND BALANCED GROWTH STRATEGY

• • Proven regional expansion strategy with well-defined objectives and a track record of successful investments

• • Since its founding, the MDMG has constantly extended its medical products to satisfy market demand, and it has now evolved into a vertically integrated company that covers all human health needs from birth to old age

• • Balanced strategy: combining large greenfield hospital projects with a wide network of clinics that provide core services and benefit from an economy of scale

• • Ready to use blueprint for further expansion based on competences and available resources

1 › As of publication date

case

BEST-IN-CLASS NETWORK ACROSS RUSSIA

ATTRACTIVE

• • Comprehensive knowledge of the Russian private healthcare market

• • Projects led by highly skilled doctors and executives with extensive experience building and launching multifunctional hospitals from the ground up

• • A well-known brand with largest regional medical network, with 27 cities and 25 regions*

• • The Company's ability to operate well in unusual situations was proved by its highly effective performance during the pandemic

MARKET FUNDAMENTALS IN RUSSIA

• • Consolidation and saturation are at a low level, particularly in the regions

• • Still a developing market with significant growth potential

• • State support for private healthcare companies is provided by a favourable regulatory environment, which includes a 0% income tax rate, a perpetual medical licence, and participation in the Mandatory Health Insurance programme

• • High entry barriers

Out-patient treatments

+18%

CAGR 2012-2021

'211,858,633

'12

430,914

In-patient days

+24%

CAGR 2012-2021

'21152,621

'12

22,351

SINCE THE IPO, OUR KEY FINANCIAL AND OPERATING METRICS HAVE GROWN STEADILY

IVF cycles

+18%

CAGR 2012-2021

'21

'12

3,863

16,526

Deliveries

+11%

CAGR 2012-2021

'218,397

'12

3,253

Strong sustainable

growth

2021 was a record year for us despite the continuing challenges posed by the pandemic. We demonstrated strong growth in total revenue by 32%, and by 44% at our hospitals in Moscow. Performance in women's and children's health services also continues to increase despite the pandemic, the growth in respective revenue was 16%. The strong results for the Group as a whole were also due to the robust operational performance of our medical centres across the whole network in Russia.

This new hospital will temporarily focus on treating COVID patients, and in due course will offer a full range of services for the whole family.

Moreover, in February 2022, in line with previously announced plans, we opened our second multi-disciplinary hospital in Tyumen, with 100 beds. In addition, we continued to develop our new business segment under the brand MD Lab and have already opened two laboratory test collection points.

The first full year of operations at the Lapino-2 surgical facility, which specialises in oncology, saw revenue of RUB 1,798 mln and utilisation rate of 40%, while the facility continues to have significant potential for future growth. At the same time, the Lapino-4 infectious diseases facility, which we opened last February, ramped up to full capacity. Lapino-4 is continuing to expand out-patient services for COVID-19 patients, including thanks to telemedicine services, which support a significant increase in patient flows. For COVID-19 patients we also offered high-quality emergency support and had deliveries in specially designated 'red zones', as well as carried out complex cardiological and oncological operations.

Overall in 2021 we saw the demand for our services begin to recover. Among other metrics, the number of in-patient and out-patient visits across the Group not only increased year-on-year but exceeded the level of 2019, before the pandemic. We believe that the demand for private medical care will continue to recover in 2022 as the COVID situation stabilises.

Growth in the number of out-patient visits to 1,858,633 also confirms that we offer a nationally accessible network with high levels of coverage. Moreover, we are achieving this while maintaining robust margins.

I am pleased to note that in addition to our Moscow hospitals our regional facilities also recorded robust results. In particular, our Tyumen-1 hospital demonstrated strong growth in revenue by 49% to RUB 1,287 mln in 2021, while its utilisation rate amounted to 60%.

This shows that our diversified business model is driving the sustainable development of our business. This factor, along with low debt of RUB 1,924 mln and a strong cash position, is evidence of our stable position even in the face of challenging external conditions.

Given this success we are continuing to develop our regional network. In January 2022, we opened the 150- bed MD Lakhta multi-disciplinary hospital in St Petersburg, Russia's second-largest market.

I would like to express my gratitude to our whole team - it is thanks to them that the Group achieved such strong results in what was a challenging year in 2021. I firmly believe that together we will continue to raise the bar in 2022.

I would like to express my gratitude to our whole team - it is thanks to them that the Group achieved such strong results in what was a challenging year in 2021. I firmly believe that together we will continue to raise the bar in 2022.

Our business saw a successful year in 2021: our effective response to the challenges associated with COVID-19 enabled us to demonstrate excellent financial results. I am particularly pleased to note our excellent performance in areas not related to healthcare for women and children. This segment accounted for 51% of our total revenue in 2021, up from 45% a year earlier. At the same time, we continued to grow in those areas that have historically been our main focus, with revenues from healthcare for women and children increasing by 16%. We believe that our diversification strategy is being implemented successfully, and we continue to unlock the huge potential of our business.

Overall in 2021, we saw the demand for our services begin to recover. The number of in-patient and out-patient visits across the Group not only increased year-on-year but exceeded the level of 2019, before the pandemic. We believe that the demand for private medical care will continue to recover in 2022 as the COVID situation stabilises.

Multi-disciplinary

Year after year, our operational and financial performance illustrates

leadership

our company's consistent growth and potential for additional expansion.

OPERATIONAL KPIs

Out-patient treatments

Out-patient treatments

The Lapino complex, has been a crucial factor in our continued growth with its recent expansion and operational growth. Our regional hospitals and clinics also had strong results in 2021, finishing the year with a record number of in- and out-patient visits, deliveries, and IVF cycles.

In-patient days

In-patient days

We were able to quickly adapt to the new reality, which allowed us to improve the group's financial and operational performance while also diversifying our businesses

Dr Mark KURTSER,

CEO

IVF cycles

Deliveries

8,397

18,004

FINANCIAL KPIs RUB mln

Revenue

EBITDA and EBITDA margin

EPS, (RUB/GDR)

7,759

6,808

7,277

7,446

8,397 +5%

CAGR 2017-2021

Net debt

Net debt

33%

3,530