Bangkok Dusit Medical Services : MD&A Quarter 3/2022

Executive Summary

3Q22 & 9M22 Performance

3Q22 9M22

THB% Chg THB % Chg

1. (YoY) mm (YoY) Operating Income 23,985 19% 69,125 28%

Remark: YoY means changes comparing to 3Q21 and 9M21

3Q22 Performance

Bangkok Dusit Medical Services Public Company Limited (“Company”) and subsidiaries reported consolidated operating income for the third quarter of 2022 (“3Q22”) of Baht 23,985 million, an increase of 19% from 3Q21. Key drivers were from higher hospital revenues of 10% YoY from Thai patients and 74% YoY from international patients. The key growth drivers were from recovery of fly-in patients together with return of Thai non COVID-19 patients. These supporting factors helped increase the overall occupancy rate from 71% in 3Q21 to 76% in 3Q22.

The Company and its subsidiaries reported EBITDA of Baht 5,999 million, increased by 17% YoY. EBITDA margin in 3Q22 was similar to 3Q21 at 25.0%. Net profit were Baht 3,386 million, increased by 35% YoY as a result of good revenues growth and high occupancy rate to achieve economy of scale.

9M22 Performance

For nine-month period ended 30 September 2022 (“9M22”), the consolidated operating income were Baht 69,125 million, increased by 28% YoY. In 9M22, there were good growth from COVID-19 related revenues and non COVID-19 revenues which were driven from both Thai and international patients. As a result, overall occupancy rate increased from 57% in 9M21 to 75% in 9M22.

The Company and its subsidiaries reported EBITDA of Baht 17,293 million, increased by 40% YoY resulting in an increase in EBITDA margin from 22.9% in 9M21 to 25.0% in 9M22.

Net profit was Baht 9,493 million, increased by 79% YoY.

Major Development in 3Q22

1. TRIS Rating upgraded the company rating on
   BDMS to “AA+” with a “stable” outlook
   TRIS Rating upgraded BDMS and its senior unsecured debentures rating to “AA+” from “AA”, with a “stable” outlook. The upgrades reflect BDMS’s better-than-expected operating performance, supported by strong recovery of international patients, its improving efficiency, and enhanced asset utilization. In addition, the ratings reflect BDMS very strong balance sheet and abundant liquidity profile.
2. Grand opening of N Health Novogene Genomic (NNG)
   NNG, the private leading next generation sequencing center in Thailand, had a grand

• Revenues from sales of goods were Baht 875 million, increased by 11% YoY.
• Other incomes were Baht 285 million, decreased by 42% YoY as Mövenpick BDMS Wellness Resort Bangkok temporary closed for renovation since January 2022.

Operating Income Comparing to 2Q22 (QoQ)

In 3Q22, total operating income increased Baht 2,004 million or increased by 9% QoQ. This was due to a good recovery of 14% QoQ from non COVID-19 revenues while a decline of 26% QoQ from COVID-19 related revenues. The portion of COVID-19 related revenues to revenues from hospital operations declined from 13% in 2Q22 to 9% in 3Q22.

Operating Expenses

Total Operating Expenses Comparing to 3Q21 (YoY)

together with an increase in marketing, utility and other administration expenses.

Total Operating Expenses Comparing to 2Q22 (QoQ)

In 3Q22, the Company and its subsidiaries reported total operating expenses & depreciation increased by 6% QoQ mainly because of higher staff expenses.

Other Major Items

• Finance expenses decreased to Baht 154 million in 3Q22 or decreased by 11% YoY due to redemption of debentures totaling of Baht 3,100 million.
• Corporate income tax in 3Q22 were Baht 824 million, increased from Baht 645 million in 3Q21 due to higher earnings before taxes.

Profitability Analysis

= Total operating income – Total operating expenses (Excluding depreciation and amortization)

Profitability margin calculated based on operating income

In 3Q22, the Company and its subsidiaries reported total operating expenses & depreciation of Baht 19,475 million, increase of Baht 2,836 million or 17% YoY mainly due to higher doctor fees given the growth in revenue from hospital operations and higher clinical & non clinical staff expenses

The Company and its subsidiaries recorded EBITDA of Baht 5,999 million in 3Q22, increased by 17% YoY. However, EBITDA margin decreased slightly from 25.4% in 3Q21 to 25.0% in 3Q22 mainly due to increasing expenses as a result of rising inflation.

Other Major Items

• Finance expenses decreased to Baht 463 million in 9M22 or decreased by 17% YoY due to redemption of debentures during 9M22.
• Corporate income tax in 9M22 were Baht 2,422 million, increased from Baht 1,358 million in 9M21, due mainly to increase in pre-tax profit in 9M22.

Profitability Analysis

= Total operating income – Total operating expenses (Excluding depreciation and amortization)

Profitability margin calculated based on operating income

The Company and its subsidiaries recorded EBITDA of Baht 17,293 million in 9M22, increased by 40% YoY resulting in an increase in EBITDA margin from 22.9% in 9M21 to 25.0% in 9M22.

Net profit was Baht 9,493 million, increased by 79% YoY resulting in an increase in net profit margin to 13.7% in 9M22. EPS was Baht 0.60 per share in 9M22.

Assets

As of 30 September 2022, the Company and its subsidiaries reported total assets of Baht 133,875 million, increased by 4% from 31 December 2021. Such increases were mainly from trade & other receivables and other non-current assets.

The Company carried goodwill of Baht 17,539 million, which remain unchanged from 31 December 2021. Goodwill were mainly from acquisitions. Such goodwill is tested for impairment annually and when circumstances indicate that the carrying value may be impaired. However, the Company has considered that this goodwill is not impaired.

Other assets of Baht 10,469 million mainly consisted of (1) other current financial assets which were investment in fixed deposits and mutual funds of Baht 3,214 million, (2) other non-current assets of Baht 3,093 million which mainly were prepayment of long-term land lease for the BDMS Silver Wellness & Residence project of Baht 2,503 million and (3) intangible assets which mainly were computer software of Baht 1,566 million.