Asklepios: Solid business performance in 2016

In the 2016 financial year, Asklepios Kliniken built on the solid development achieved in previous years. Thanks to a consistent strategic focus on medical excellence and top quality, medical services were further improved in the interest of patients. This strategy was a success. For instance, the number of patients treated at Asklepios’ healthcare facilities jumped by 2.8% to around 2.3 million people in 2016. Overall, the Group achieved good results in the 2016 financial year. At the same time, Asklepios increased investments in its healthcare facilities.

Stable key financial indicators

The Group’s revenue amounted to EUR 3.2 billion in the financial year (2015: EUR 3.1 billion). EBITDA climbed to EUR 390.4 million (2015: EUR 374.0 million). Efficiency enhancements and a lower increase in the cost of materials had a positive impact here. Asklepios was able to reduce the cost of materials ratio by 0.5 percentage points to 21.7% (2015: 22.2%). The staff costs ratio was 62.8% (2015: 62.1%). Net income for the year totalled EUR 192.1 million in 2016 (2015: EUR 176.8 million). At 6.0%, the return on sales was slightly above the level of the previous year (2015: 5.7%). Equity amounted to EUR 1,273.4 million as at 31 December 2016 (2015: EUR 1,213.5 million). At 36.8%, the equity ratio was above the level of the previous year (2015: 34.7%).

“The steadily increasing influx of patients to our healthcare facilities demonstrates that the path we have taken is the right one. Our hospitals’ clear, future-oriented medical performance profiles, which are geared towards the highest quality standards, are developing a cross-regional allure and are more and more frequently attracting patients from outside the direct catchment area of our facilities. The strategy of setting ourselves apart from the competition in the region with our Centres of Excellence has proved successful at Asklepios,” said CEO Kai Hankeln.

High investments in employees, healthcare facilities and patient care

Asklepios has responded to challenges in the healthcare sector, such as outpatient hospital services, and distinguished itself with special medical services in the inpatient and outpatient sectors. In the period from January to December 2016, Asklepios invested a total of EUR 273.5 million in healthcare facilities (+4.3%). The share of total investments made with the group’s own funds, amounting to 64%, was financed entirely from cash flow from operating activities, which amounted to EUR 341.5 million as at 31 December 2016 (2015: EUR 290.6 million). These funds were used especially for training staff, investing in medical facilities and strategically expanding the Centres of Excellence, which was clearly aimed at further improving patient care.

“In 2016, we continued to make significant investments in even better medicine, averaging around EUR 750,000 per day. This equates to total investments of roughly EUR 273.5 million in the past financial year. We are able to ensure high quality medical care and treatments for our patients only with the best employees. This is why we believe that a key aspect of employee satisfaction also involves stable investments in training and further education offerings and individual development prospects. Once again, many top-class doctors and senior consultants also made the deliberate decision to join Asklepios in 2016. We will also continue to provide our employees with a safe and excellent medical work environment,” said CEO Dr Thomas Wolfram.

As in previous years, Asklepios also hired additional staff for patient treatment and care in 2016. The number of full-time equivalents was 34,887 in the financial year (2015: 34,690 full-time equivalents). The Group as a whole currently has around 46,000 employees. This means that the number of employees has been rising steadily since Asklepios was founded more than 30 years ago.

A key pillar of Asklepios’ HR strategy involves training for medical staff at the highest level. Both external offerings and internal facilities are used for this purpose. For instance, the Asklepios training centre for healthcare professionals offers around 40 training courses each year. Since 2005, over 75,000 doctors have taken part in the internal and external training courses offered by the Asklepios Academy for Doctors.

In addition to continued investments in staff and state-of-the-art medical technology, the ongoing rise in quality and thus the safety and satisfaction of our patients is a key pillar of the excellence strategy. Asklepios is setting new standards by introducing numerous new measures. For instance, the Hamburg cluster is a leader in the prevention of multi-resistant organisms and performs multiple MRSA screening tests every year compared to other hospitals in Hamburg. Asklepios was one of the first German healthcare providers to introduce systematic quality management.

Numerous top-class doctors at Asklepios, recruitment in the nursing sector remains challenging

In its yearly special edition on “Germany’s Top Doctors” FOCUS, a news magazine, listed 49 Asklepios doctors across Germany who are leading specialists in their field. This constitutes an increase of 20 “top doctors” as against 2015. Together with these doctors, in- and outpatient care provided by highly qualified staff forms the backbone of Asklepios’ excellence strategy.

“Thanks to an innovative work environment with the latest medical technology and our many formats to exchange knowledge between staff members, Asklepios is an attractive employer for top-class doctors in Germany and abroad,” commented Dr Thomas Wolfram. “However, the staffing situation in the nursing sector will remain a key challenge in the foreseeable future. We are going to do even more to arouse interest in nursing as a career. This essentially means even more investments in further training and qualifications for our staff. In addition, we need to further increase and demonstrate the attractiveness and public appreciation of nursing professions together with other key players in the healthcare sector and decision-makers in the field of politics. This requires a joint initiative involving all those responsible in the healthcare sector. In particular, training should be more varied to attract more people to the profession. This is why we are calling for educational qualifications in the nursing sector and improved conditions to train young people who hold an intermediate secondary school certificate and would look to follow the conventional path of a dual course of studies. In our organisation, we are also working on the definition of responsibilities based on a mix of skills and grades in order to improve the individual prospects of our nursing staff and create opportunities with consistent, lifelong training opportunities and career opportunities in the long term, and also improve individual remuneration with specialist training.”

Conservative financing structure safeguards the trust of our investors; optimised equity investment and financing structure

Asklepios’ conservative financing structure is based on long terms and the trust of our investors. At the end of the reporting period on 31 December 2016, Asklepios had equity of EUR 1,273.4 million (2015: EUR 1,213.5 million) and a solid equity ratio of 36.8% (2015: 34.7%). Consolidated total assets increased to EUR 3,460.8 million. The debt ratio amounted to 1.3 times EBITDA (31 December 2015: 1.6x). Net debt as at the end of the reporting period amounted to EUR 524.3 million (31 December 2015: EUR 595.9 million). Asklepios therefore has a strong financial footing with ample opportunity to invest in innovation and excellent medical quality.

As part of the optimisation of the investment structure under company law, the financial structure and financing instruments were standardized at a single level. A central measure was the debt pushdown for the most important financing instruments. This involved replacing Asklepios Kliniken GmbH as the borrower with the new holding company, Asklepios Verwaltungsgesellschaft mbH. In the second half of 2016, in preparation for the debt pushdown, Asklepios made a change offer to the 2013 Schuldschein investors, which was enthusiastically accepted. The investors were essentially transferred to the 2015 standard documentation, which enabled them to avoid structural subordination. The debt pushdown marks the conclusion of extensive restructuring measures.

“In 2016, we significantly improved our financing structure. With our harmonised financing, which has now been ensured in the long term, and strong equity basis, Asklepios is in the best position to seize attractive growth opportunities at all times as an integrated healthcare company. The investments we need to make in order to provide advanced medicine are financed entirely with operating cash flow, as in previous years,” said CFO Hafid Rifi.

Outlook: shaping the digital transformation of the healthcare system in the interest of patients

In the years to come, Asklepios will increasingly focus on the advancement of outpatient treatment and digitisation in healthcare. In addition to consistent quality management and continued investments in staff and medical technology, the digitisation of medicine in particular is at the forefront of continued improvements in diagnosis and treatment possibilities. Asklepios aspires to help shape the digital transformation of the healthcare system in the interests of its patients to a significant extent. This is demonstrated with the strategic investment in Meierhofer AG, one of the leading IT service providers for hospital information systems, which is also a key pillar of this goal. For instance, Meierhofer develops electronic medication solutions in close cooperation with Asklepios’ departments. In this context, unit-dose robots are already being used at many hospitals. Easing the burden on medical and administrative staff with digitisation is another declared aim at Asklepios. There are also plans to implement an online appointment system across the Group in the current financial year.

In addition, Asklepios sees outpatient medical services as an opportunity. For instance, offering specific services increasingly on an outpatient basis with the same or better quality of treatment would result in a more efficient use of inpatient systems. Many illnesses can now be treated successfully without inpatient hospital stays. Asklepios’ medical centres are gaining significance within this context. In close consultation with inpatient hospitals, Asklepios rapidly exchanges medical information and is capable of offering suitable treatments to all its patients based on their situation.

“Digitisation will play an increasingly important role in the years to come. Our strategic investment in one of Germany’s leading specialists for hospital IT is strengthening the integration of eHealth solutions in our own network in a targeted manner. Our 150 healthcare facilities will use this software for cross-sectoral, interdisciplinary cooperation in the treatment network in order to optimise patient communication, “stressed CEO Dr Thomas Wolfram.

“We are in a good position for 2017 and we will continue our targeted development in the area of digitisation,” added Kai Hankeln, CEO. Our business goals for 2017 include organic revenue growth in a range of 1.5% to 2.5% and a slight but sustainable increase in EBITDA compared to the previous year. On the basis of these targets, we want to achieve another slight year-on-year increase in the equity ratio in the 2017 financial year.

The full 2016 Annual Report is available at www.asklepios.com/ir.

About Asklepios

The healthcare group Asklepios is among the leading private operators of hospitals and healthcare facilities in Germany. The hospital group stands for highly professional care of its patients with a clear commitment to medical quality, innovation and social responsibility. On this basis, Asklepios has been developing dynamically ever since it was founded more than 30 years ago. The group currently has 150 healthcare facilities across Germany. Its facilities include acute hospitals providing all levels of care, specialist clinics, psychiatric and forensic facilities, rehabilitation clinics, nursing homes and medical centres. In the 2016 financial year, 2.3 million patients were treated in the Asklepios Group’s facilities. The company has approximately 46,000 employees.