Sonic Healthcare : CEO Presentation Full Year Results to 30 June 2019 Opens in a new Window

Financial and Operational Review

For the year ended 30 June 2019

Colin Goldschmidt

CEO, Sonic Healthcare 20 August 2019

Forward-looking statements

This presentation may include forward-looking statements about our financial results, guidance and business prospects that may involve risks and uncertainties, many of which are outside the control of Sonic Healthcare. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date that they are made and which reflect management's current estimates, projections, expectations or beliefs and which involve risks and uncertainties that could cause actual results and outcomes to be materially different. Risks and uncertainties that may affect the future results of the company include, but are not limited to, adverse decisions by Governments and healthcare regulators, changes in the competitive environment and billing policies, lawsuits, loss of contracts and unexpected growth in costs and expenses. The statements being made in this presentation do not constitute an offer to sell, or solicitation of an offer to buy, any securities of Sonic Healthcare. No representation, warranty or assurance (express or implied) is given or made in relation to any forward-looking statement by any person (including Sonic Healthcare). In particular, no representation, warranty or assurance (express or implied) is given in relation to any underlying assumption or that any forward-looking statement will be achieved. Actual future events may vary materially from the forward-looking statements and the assumptions on which the forward- looking statements are based. Given these uncertainties, readers are cautioned to not place undue reliance on such forward-looking statements. The information provided in this presentation is based on and should be read in conjunction with the Appendix 4E released to the ASX on 20 August 2019 and may include earnings figures restated on a "constant currency" basis.

Sonic Healthcare | Full-year Results FY 2019

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Headlines

• FY 2019 result in line with guidance (constant currency)
• • Underlying EBITDA growth 6.7%
• Statutory result strong (actual currency)
• • Revenue growth 11.6% to A$6.2 billion
  • EBITDA growth 13.3% to A$1.1 billion
  • Net profit growth 15.6% to A$550 million
• Final dividend up 4.1% to A$0.51 per share (full-year dividend up 3.7% to A$0.84)
• Strategic acquisition of Aurora Diagnostics completed in January 2019
• Strategic divestment of non-core GLP Systems completed in June 2019
• Growth momentum strong - major opportunities ahead

Sonic Healthcare | Full-year Results FY 2019

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FY 2019 Summary

A$M Actual Currency	FY 2019	FY 2018	Growth
Revenue	6,184	5,541	12%
Non-recurring gain (GLP Systems)	(50)	-
New revenue accounting standard (AASB 15) impact	9	-
Underlying Revenue	6,143	5,541	11%
EBITDA	1,075	948	13%
Non-recurring gain (GLP Systems)	(50)	-
New revenue accounting standard (AASB 15) impact	9	-
Non-recurring costs	27	14
Underlying EBITDA	1,061	962	10%
Net profit	550	476	16%
EPS (cents)	122	112	9%

• Revenue and earnings
• • Group organic revenue growth ~4% (constant currency)
  • Revenue reduced by ~A$33 million due to merger of US Midwest business into 49% owned ProMedica JV
  • Underlying EBITDA growth 6.7% (constant currency)
  • EPS growth impacted by Aurora acquisition-related capital raising and A$20 million one-off tax benefit in prior year
  • New revenue accounting standard (AASB 15) effective 1 July 2018 (reclassification of doctor contract amortisation)
• Non-recurringitems
• • Gain on sale of GLP Systems A$50 million pre-tax, A$49 million after tax
  • Costs relating to acquisitions, contract bids, laboratory relocations, mergers and restructuring
• Strong cash generation
• • Cash generation from operations A$847 million, up 10% on prior year
  • 102% conversion of EBITDA to gross operating cashflow, after adjustments for non-operating cash items (GLP Systems gain and AASB 15)

Sonic Healthcare | Full-year Results FY 2019

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FY 2020 Guidance

• Guidance excludes impact of new lease accounting standard AASB 16
• • Refer to Appendix 4E for estimated financial impact of AASB 16
• Guidance
• • EBITDA growth 6-8% on underlying FY 2019 EBITDA of A$1,052 million* (constant currency)
  • Interest expense to increase by ~3% (constant currency)
  • Effective tax rate ~25%
  • Capital expenditure expected to be significantly lower in FY 2020
• Key guidance considerations
• • Excludes future acquisitions
  • Incorporates PAMA fee reductions (USA) equivalent to ~2% of total group EBITDA
  • No other regulatory changes assumed
  • Current interest rates assumed to prevail
  • Assuming current exchange rates prevail, EBITDA guidance would increase by an additional ~3%

• Impact of revenue accounting standard (AASB 15) will be considered "underlying" in FY 2020, changing base from A$1,061 to A$1,052

Sonic Healthcare | Full-year Results FY 2019

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