#1ASX Announcement 15 November 2021 AUSTRALIAN Clinicalabs Australian Clinical Labs Limited ABN 94 645 711 128 Registered Office: 1868-1892 Dandenong Road Clayton VIC 3168 Australia clinicallabs.com.au ACQUISITION OF MEDLAB PATHOLOGY - INVESTOR PRESENTATION Australian Clinical Labs (ACL or Company) provides to the market a copy of an investor presentation in respect of its binding agreement to acquire Medlab Pathology (Medlab), a leading Australian private pathology provider, with two laboratories and 288 collection centres across NSW and QLD. ACL Chief Executive Officer and Executive Director, Melinda McGrath, and Chief Financial Officer, James Davison, will host a webcast for investors and analysts today at 11.00am (Melbourne time). Participants can register for the webcast by accessing this link: https://us02web.zoom.us/webinar/register/WN plVy9STQS06H v6sR6uecw An archive of the briefing will be available afterwards at: https://investors.clinicallabs.com.au/ - ENDS - This announcement was authorised for release to ASX by the Board of Directors of ACL. For further information regarding this announcement, please contact: Investors Davina Gunn Media Sue Cato Media Relations Email: [email protected] Phone: +61 (0) 2 8306 4244 Investor Relations Email: [email protected] Phone: +61 (0) 400 896 809 About Australian Clinical Labs ACL is a leading Australian private provider of pathology services. Our 86 NATA accredited laboratories perform a diverse range of pathology tests each year for a range of clients including doctors, specialists, patients, hospitals and corporate clients. ACL is one of the largest private hospital pathology businesses nationally. ACL is focused on its mission of combining talented people, and medical and scientific leadership, with innovative thinking and technologies to empower decision making that saves and improves patients' lives. Forward looking-statements This announcement may contain forward-looking statements which are statements that may be identified by words such as "may", “will”, “would”, “should”, “could”, “believes", "estimates", "expects", "intends", "plans", "anticipates", "predicts", "outlook", "forecasts", "guidance" and other similar words that involve risks and uncertainties. These statements are based on an assessment of present economic and operating conditions and on a number of best estimate assumptions regarding future events and actions that, at the date of this announcement, are expected to take place. No person who has made any forward-looking statements in this announcement (including the Company) has any intention to update or revise forward-looking statements, or to publish prospective financial Page 1 of 2 Australian Clinical Labs Limited ABN 94 645 711 128#2information in the future, regardless of whether new information, future events or any other factors affect the information contained in this announcement, other than to the extent required by law. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties, assumptions and other important factors, many of which are beyond the control of the Company, the directors and management of the Company. We recommend that shareholders read in conjunction with this announcement, Section 4 and Section 5, and other information in, the Prospectus. The Company cannot and do not give any assurance that the results, performance or achievements expressed or implied by the forward-looking statements contained in this announcement will actually occur and investors are cautioned not to place undue reliance on these forward-looking statements. Page 2 of 2 Australian Clinical Labs Limited ABN 94 645 711 128#3AUSTRALIAN Clinicalabs Acquisition of Medlab Pathology Melinda McGrath CEO and Executive Director James Davison CFO November 2021#4• • • • • Acquisition of Medlab Pathology' will further strengthen ACL's national scale and deliver significant growth opportunities ACL has entered into a binding agreement to acquire Medlab Pathology; a leading Australian private pathology provider, with two laboratories and 288 approved collection centres (ACCs) across NSW and QLD The Medlab acquisition forms part of a well-defined strategic growth plan and has a complementary geographic footprint to deliver a doubling of market share in NSW to 20.4%, and a strong entry platform in QLD with 6.5% market share (by ACCs) In FY21, Medlab generated $92.6m in revenue and $10.5m in normalised EBITDA (pre AASB-16 and JobKeeper)² ACL will acquire the key business assets for $70m, with upfront consideration of $60m paid at completion and deferred consideration of $5m on completion of CY22 and a further $5m subject to the achievement of non-COVID revenue retention hurdles The price represents 6.7 x FY21 normalised EBITDA pre AASB-16, or 2.6x normalised EBITDA post AASB-16 ACL expects to obtain synergy benefits of more than $10m which will take 18 to 24 months to be fully achieved on a run rate basis Costs to obtain synergies and integrate the businesses will lead to transaction and one-off costs of approximately $10m which will be expensed over the same period On a post synergy basis inclusive of one-off costs in bringing the businesses together the acquisition multiple is expected to be 3.9x FY21 normalised EBITDA (pre AASB-16) or 2.2x normalised EBITDA (post AASB-16) The transaction will be funded by cash on balance sheet and existing debt facilities and is expected to complete in December 2021 (1) There are various completion adjustments with the effective economic completion expected to be 1 November 2021. The ACCC has confirmed that it does not intend to conduct a public review of the transaction. The acquisition is subject to approval by FIRB and other customary conditions precedents. Actual cash paid will be adjusted for profits and other agreed matters 1#5Medlab Pathology: a leading Australian privately-owned independent pathology provider with a focus on Sydney and South-East Queensland $ $92.6m FY21 Normalised1 Revenue $ $10.5m FY21 Normalised² EBITDA 2 NATA accredited laboratories 288 Approved Collection Centres Medlab Background Founded in 2001, provides a comprehensive range of pathology services to General Practitioners, Specialists, Medical Centres and Nursing Homes • Medlab's focus is community pathology, with >95% of it's revenue generated through its network of ACCs • The business has grown through organic Approved Collection Centres (ACC) expansion in NSW, and three acquisitions ACC Network Laboratories • Medlab operates a network of 288 ACCS • 205 in NSW: Medlab's footprint is highly complementary to ACL's: Medlab has a very strong presence in Western Sydney, where ACL is comparatively underweight. By comparison, ACL has a stronger position in the Eastern suburbs, the Northern Beaches and the Hills Shire region. Outside Metro Sydney, Medlab's ACCs are mostly located in Wollongong and the South Coast 83 in QLD: The acquisition will provide ACL with an entry platform to Queensland. Medlab's 83 ACCs in QLD equates to 6.5% of ACC's in Queensland spread across South East Queensland with a presence across Brisbane, the Gold Coast and the Sunshine Coast Medlab operates two laboratories: • Auburn in Sydney • Wilston in Brisbane (1) Ex-JobKeeper (2) Pre AASB-16 and JobKeeper, based on PWC Quality of Earnings review 2#6Medlab's complementary ACC network to double ACL's ACCs in NSW and accelerate growth in Queensland NSW QLD Medlab ACL Combined Medlab ACL Combined Key ACL Medlab 205 222 427 83 1 84 National Park River National Park Gymple A15 Wollemi National Park Yengo National Park National A1 Maitland castle arlestown Nelson E glof.co Sydney M1 M31 gong Wollongong A48 M31 urn Newcastle Noosa Heads Sunshine Coast SH past avundra A17 No Brisbane ast Gold Coast Nowra Medlab's footprint is highly complementary to ACL in NSW: Medlab's ACCs are concentrated in Western Sydney, where ACL is comparatively underweight. ACL has a stronger position in the Eastern suburbs, the Northern Beaches and the Hills Shire region Outside Metro Sydney, Medlab's ACCs are mostly located in Wollongong and the South Coast. ACL's clinics are concentrated in the North The acquisition will provide ACL with an entry platform to Queensland. Medlab's 83 ACCS in QLD equating to 6.5% of ACCS in Queensland spread across South East Queensland with a presence across Brisbane, the Gold Coast and the Sunshine Coast 3#7Strategic Benefits: The acquisition has several key strategic benefits Expected to bring additional scale in two significant target markets of NSW and QLD Scale NSW is the largest market in Australia and QLD is number three Leverage from existing scale and excellent geographic bolt on ACL has a number of national customers that it hasn't been able to service in QLD and across NSW Customer • ACL / Medlab combined will enable a full service offering in mainland states Service • ACL will be able to compete more effectively for national tenders Key Subspecialty benefits ACL has significant strength in skin histopathology through its acquisition of Sun Doctors and its specialists in each State ACL has gastroenterology leadership through its gastro specialists and inpatient coverage Medlab has leading skin and gastroenterology pathology specialists to enhance ACL strengths in QLD and NSW QLD Entry ACL has a QLD molecular laboratory (COVID testing for symptomatic patients and travellers) - this will facilitate Medlab's COVID offering • Medlab has an established clinical and histopathology lab in Brisbane, Sun Doctors a histopathology lab at the Gold Coast Medlab Brisbane will enable enhanced service for the ACL purpose built Clinical Trials laboratory 4#8Transaction Rationale: Strategically fills gaps for ACL and will generate more than $10m of operational efficiencies Scale in NSW ivivi Broader offerings Medlab: 205 ACCs in NSW (9.8% of NSW ACCs) • . . . Combined ACL/Medlab doubles in scale to 20.4% of NSW ACCS Provides scale to invest in further efficiencies via larger consolidated laboratory Complementary footprint Increased drive through sites (COVID-19 traveller opportunity) ACL can insource majority of Medlab's testing being sent away to other providers Increased ability to invest in digital histopathology Medlab is AS4308 accredited: provides ACL with the ability to compete in NSW and nationally for commercial drug and alcohol testing tenders Excellent Entry platform in Qld • • Medlab: 83 ACCs in Queensland (6.5% of ACCs in Qld) Allows full laboratory with scale Accelerated growth and scale for investment • Histology lab opportunities • Improved laboratory platform Business will be integrated to enable scale benefits to be achieved • Opportunity to combine labs into one highly automated central lab in NSW - location TBD • The Queensland lab comprises 1,000m² of space and is on substantial land holding (~6,500m²) allowing for future expansion • Future-proof the business in both NSW and Queensland and provide strong growth platforms in both States Operational Synergies and Integration Track Record • Operational synergies estimated to be >$10m that can be realised over next 18 to 24 months Track record of integration success onto unified national pathology platform 5#9Overview of Medlab financial metrics James Davison, CFO AUSTRALIAN Clinicalabs#10Key terms: The acquisition has a total expected purchase price of $70m and has normal conditions associated with pathology acquisitions Purchase price Implementation Costs and Synergies Conditions and timing considerations • ACL has entered into a binding agreement to acquire the key business assets of Medlab Pathology for $70m, with $60m paid at completion and deferred consideration of $5m on completion of CY22 and a further $5m subject to the achievement of non-COVID revenue retention hurdles • Price represents 6.7x FY21 normalised EBITDA pre AASB-16 and ex-JobKeeper, or 2.6x normalised EBITDA post AASB-16 Costs to obtain synergies and integrate the businesses will lead to transaction and one-off costs of approximately $10m which will be expensed over 18-24 months Expect synergy benefits of more than $10m which will take 18-24 months to be fully achieved on a run rate basis Synergies to be generated across several areas including: Duplicated systems and laboratories . Efficiencies • Consumable savings • ACL has track record of generating operating leverage through its unified laboratory system • • ACCC has confirmed that it does not intend to conduct a public review of the transaction Acquisition is subject to approval by FIRB and other customary conditions precedent Expected completion in December 2021 Deal funding • The transaction will be funded by cash on balance sheet and existing debt facilities 7#11Financial impact and multiples Financials EV/EBITDA multiples Medlab, ACL, Combined $m COVID-19 Revenue FY21 Normalised 1 Pro Forma FY21 AASB 1175 AASB 165 6.7x 15.5 137.9 153.4 5.7x Non COVID-19 Revenue 77.0 536.5 613.5 Total Revenue 92.5 674.4 766.9 EBITDA AASB 16 (pre- synergies)5 27.0 230.6 257.7 Margin, % 29.2% 34.2% 33.6% 2.6x EBITDA AASB 117 (pre- 2.2x synergies) 10.5 Margin, % 11.3% 143.6 21.3% 154.1 20.1% Expected synergies >10 Post-synergies FY21 EBITDA AASB 117 >164.1 Margin, % 21.3% Upfront Price FY21 Normalised Medlab EBITDA2 Total expected payment / FY21 Normalised Medlab EBITDA³ 3.9x 2.2x Total Purchase price and integration costs / FY21 Normalised EBITDA post-synergies4 Note: (1) Based on PWC Quality of Earnings review. Normalisation from PWC removed Job Keeper but does not otherwise normalise for COVID-19 impact (2) Based on $60M upfront price against $10.5M Medlab FY21 Normalised EBITDA, (3) Based on $70M total price against $10.5M Medlab FY21 Normalised EBITDA (4) Based on $70M purchase price plus $10M integration costs, against $10.5M in FY21 Normalised EBITDA with $10M further synergies (5) Calculated using estimates for AASB-16 lease adjustments 8#12ACL Growth Strategy Melinda McGrath, CEO, Executive Director AUSTRALIAN Clinicalabs#13Well-defined growth strategy The acquisition of Medlab forms part of a well-defined strategic growth plan Strategic Acquisitions Organic Market Growth . Non-COVID pathology market forecast to grow ~4% to 6% p.a. (1) due to predictable and consistent drivers including growing and ageing population, increasing testing rates and scientific and technological advancements Embedded Revenue Opportunities • Broaden general practitioner relationships GOT Precision medicine SunDoctors • Ramp up existing contracts • Increased clinical trial revenue . Commercial and other COVID testing Operational Performance Improvements Continuous improvement program . Extract additional . benefits from unified pathology system Opportunities from SunDoctors integration • National connectivity drives best practice Footprint Expansion Increase position in New South Wales growth corridors • Targeted revenue growth in Queensland Provide additional services • Acquisitions in specialist and general pathology (1) Partners in Performance estimates. Previous investment provides strong foundations for future growth 10#14In Summary 1 Medlab acquisition forms part of well-defined strategic growth plan and has complementary geographic footprint 2 Acquisition will further strengthen ACL's national scale 3 Will deliver both significant growth opportunities and shareholder value 4 Additional scale to underpin further operating leverage 5 ACL has demonstrated a proven track record in integrating acquisitions to deliver shareholder value 6 7 Post acquisition, ACL will have histology labs in each State in which it operates, including leading skin and gastroenterology specialist to further support ACL's strength in these areas ACL Travel Testing Portal now live to support travellers as international borders open up 8 Medlab acquisition to strategically assist ACL in targeting emerging private COVID traveller market 11#15Q&A AUSTRALIAN Clinicalabs#16Important notice and disclaimer Summary information This Presentation contains summary information about Australian Clinical Labs Limited (ACN 645 711 128) (ACL) and its activities which is current only as at the date of this Presentation (unless specified otherwise). The material in this Presentation is general background information and does not purport to be complete. It does not purport to summarise all information that an investor should consider when making an investment decision. It should be read in conjunction with ACL's other periodic and continuous disclosure announcements lodged with the Australian Securities Exchange (ASX), which are available at www.asx.com.au. No representation or warranty, expressed or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in this Presentation. To the maximum extent permitted by law, ACL, its related bodies corporate and their respective directors, officers, employees, agents and advisers disclaim all liability and responsibility for any direct or indirect loss, costs or damage which may be suffered by any recipient through use of or reliance on anything contained in, implied by or omitted from this Presentation. Reliance should not be placed on information or opinions contained in this Presentation and, subject only to any legal obligation to do so, ACL does not have any obligation to correct or update the content of this Presentation. The information in this Presentation remains subject to change without notice. Financial information Certain financial measures included in this Presentation are 'non-IFRS financial information' under ASIC Regulatory Guide 230: 'Disclosing non-IFRS financial information' published by ASIC and also 'non-GAAP financial measures' within the meaning of Regulation G under the U.S. Securities Act and are not recognised under AAS and International Financial Reporting Standards (IFRS). Such non-IFRS financial information/non-GAAP financial measures do not have a standardised meaning prescribed by AAS or IFRS. Therefore, the non-IFRS financial information may not be comparable to similarly titled measures presented by other entities, and should not be construed as an alternative to other financial measures determined in accordance with AAS or IFRS. Although ACL believes these non-IFRS financial measures provide useful information to investors in measuring the financial performance and condition of its business, investors are cautioned not to place undue reliance on any non-IFRS financial information/non-GAAP financial measures included in this Presentation. Certain figures, amounts, percentages, estimates, calculations of value and fractions provided in this Presentation are subject to the effect of rounding. Accordingly, the actual calculation of these figures may differ from the figures set out in this Presentation. All financial information in this Presentation is in Australian dollars ($ or A$) unless otherwise stated. Forward-looking information This Presentation and any related materials and cross-referenced information contain forward-looking statements, which may be identified by the use of terminology including 'may', 'will', 'would', 'could', 'should', 'expects', 'believes', 'targets', 'likely', 'plans', 'intends', 'aims', 'anticipates', 'estimates', 'continue', 'objectives', 'forecasts', 'guidance', 'outlook' or similar expressions. Indicators of, and guidance on, future earnings and financial position are also forward-looking statements. These statements are based on an assessment of present economic and operating conditions and on a number of best estimate assumptions regarding future events and actions that, at the date of this Presentation, are expected to take place. These forward-looking statements are not guarantees or predictions of future performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of ACL or any of its related entities (especially during the global COVID-19 pandemic), and which may cause actual results to differ materially from those expressed or implied in such statements. There can be no assurance that actual outcomes will not differ materially from these statements. Readers are cautioned not to place undue reliance on forward-looking statements. Past performance The past performance and position of ACL reflected in this Presentation is given for illustrative purposes only. Past performance of ACL cannot be relied upon as an indicator of (and provides no guidance as to) the future performance or condition of ACL, including future share price performance. No offer of securities Nothing in this Presentation should be construed as either an offer or a solicitation of an offer to buy or sell ACL securities. Information in this Presentation is not intended to be relied upon as advice to investors or potential investors and does not take into account the financial situation, investment objectives or needs of any particular investor. Before making any investment or other decision, investors should consider these factors, and consult with their own legal, tax, business and/or financial advisors. 13