Rotech Healthcare — Investor Presentation (September 2010)
26 slides from Rotech Healthcare's investor presentation, Sep 15, 2010
Slide 1: Rotech Healthcare Inc. - About Patient Care, September 2010
Exhibit 99.1 Exhibit HEALTHCARE ROTECH We Rotech Confidential September CareHealthcare 99.1 About 2010Patient INC. Inc. Care
Slide 2: Company overview
HEALTHCARE ROTECH We 1. 1 Confidential Company Care About overview Patient INC. Care
Slide 3: Company overview
HEALTHCARE ROTECH We Company -One $493mm 20 Awarded Largest Headquartered 2010 Other DME Respiratory 2 Confidential 450 Over Seven large Care of YTD locations, 11% 3% 300,000 the provider billing managed About LTM 6overview largest Revenue of86% 9net in /patients Patient competitive largely collecti
Slide 4: Rotech's national footprint and Round One and Two CBAs
HEALTHCARE ROTECH We National Round Rotech ~ 3 Confidential 75% Care of Two One locations About provider, Rotech’s CBAs Patient INC. outside inside non branches urban Care Round Round are focus One outside Oneand andTwo ofTwo Round CBAs CBAs 1 and Round 2 Competitive Bidding Areas
Slide 5: Service offerings and YTD 2010 revenue mix
HEALTHCARE ROTECH We Service YTD Oxygen Sleep Durable Nebulizer Other(1) Total Note: (1) 4 Confidential Includes Care 100% 2010 Apnea Based offerings (Medicare Medical About 5% Medications Revenue other on 24%Patient revenues INC. Equipment respiratory, and 10% Care Private) as of 12% revenues 6/30/
Slide 6: Payor mix: Rotech becoming more diversified
HEALTHCARE ROTECH We Payor 2009 Rotech 2007 VA National Apria Lincare Private Medicare Medicaid Commercial Source: 5 Confidential 9% 8% Care 2009 mix 4% 3% 7% 2009 Public About providers 42% 51% 22% 47% 7% 6% 13% becoming 38% 31% 72% 33% filings. Patient INC.more Carediversified
Slide 7: Consistent operating trends and stable patient base
HEALTHCARE ROTECH We Consistent Net 119,400 124,476 131,360 135,213 Stable (% Sleep YTD 18% 19% 27% 34% $61 $112 $90 $83 Strong ($ % 2010 1H 2009 2008 2007 $22 $36 $48 $52 9.4% Note: 6 Confidential inturnover Revenue: 2010 Care oxygen millions) 2009 8.4% apnea Capital employee control About operatin
Slide 8: Consistent Adjusted EBITDA growth and debt deleveraging
HEALTHCARE ROTECH We Successfully Consistent ($ Adjusted $77 7.5% 18.6 $43 Focus Net 2007 4.7x 5.1x 5.3x 5.6x (1) (2) 7 Confidential inIncludes See Care debt $82 $51 % millions) 2008 on appendix $89 (2) About /EBITDA deleveraging Adjusted EBITDA 2009 $5mm executing Patient 1H Q2 INC. for(1) benefit
Slide 9: Investment highlights
HEALTHCARE ROTECH We Strong Highlights Necessary, Well Scale Regulatory Proven 8 Confidential Care positioned and demographic and About cost cost-effective environment experienced efficiency Patient for INC.competitive trends Care management stabilized provide servicebidding in significant a highly
Slide 10: Favorable respiratory industry growth drivers
HEALTHCARE ROTECH We Favorable $6B -Respiratory Medicare (Beneficiaries 2.3% 20 1970 COPD (Patients 13.7 2003 Source: 9 Confidential Average US ~30% 15 750k Only 34 Care million industry 14.2 population 1990 2004 CAGR 40 hospital major incidence of Kaiser CDC, U.S. About in 46 14.5 population benefi
Slide 11: Home oxygen is cost-effective care
HEALTHCARE ROTECH We Home Oxygen -Cost-effective Patients $7/day In-patient $3,600+/day Source: 10 Confidential Average Growing Government Better Care care In-home American response patients prefer About 24 hospitalization longer is months aand alternative in-home cost-effective Patient oxygen requi
Slide 12: Highly fragmented market with local market focus
HEALTHCARE ROTECH We Market Local Highly Rapid 2009 Rotech Other Lincare American Apria 11 Confidential Care respiratory market 43% 19% industry fragmented 8% position 26% About Homefocus consolidation Patient INC. market Patient market Care 4% allows efficient operators to gain share
Slide 13: Competitive bidding reimbursement overview
HEALTHCARE ROTECH We Competitive Reimbursement -Round Source: 12 Confidential Awards Mandated Initial 9Non-winning Estimated 70% 91 Bids Rotech CBAs Care CBAs of due 21proposal CMS. About currently existing providers starting at starting by ~30% Bidding a date Congress providers Patient rates INC. c
Slide 14: How competitive bidding works
HEALTHCARE ROTECH We How Net 200 100 National Providers 30 Local Regional New 30% Average Before 70% Greater After 13 Confidential Care New of Providers Competitive Competitive Providers Competitive the existing than Number About Providers Medicare Providers providers 300% Patient providers INC. of
Slide 15: Rotech's opportunity in awarded CBAs
HEALTHCARE ROTECH We Rotech’s Awarded 3 Limited – Rotech Medicare Non-Medicare Other Note: Opportunity 14 Confidential Approximately Estimated CBAs Medicare Rotech Q1 7-12 Care 2011 YTD Medicare months revenue financial not About Round 6will Round impact of 6/30/10. oxygen awarded 70% 30% to“grandfa
Slide 16: Financial opportunity: illustrative branch EBITDA
HEALTHCARE ROTECH We Financial Illustrative Nine 5,055 Assumes – Opportunity Branch % Quarterly 100% 150% 200% 300% Note: Timing ($ $2,000 EBITDA $1,309 1 # 50% Incremental Source: Increases 15 Confidential Medicare 2~6% of increase in 3Care Quarters Volume 114 000’s) branches 4Pre-CBA oxygen 152 19
Slide 17: Rotech's exposure to Round 2 CBAs is limited
HEALTHCARE ROTECH We Rotech’s ~50% Round 28 Rural TOTAL Rotech 453 223 108 97 25 Remaining Medicare Non-Medicare Total Note: Approximately 16 Confidential CBAs Care Medicare YTD markets of 21branches located locations ROTECH About Competitive Rotech’s exposure without Round rural MSAs Medicare 6/30/
Slide 18: Regulatory environment stabilized
HEALTHCARE ROTECH We Regulatory 2011 2010 2009 – No Source: 17 Confidential Won $900k Nebulizer 36-month 9.5% Reduction significant Care competitive impact: 6MIPPA Rotech impact of About 9environment oxygen medications inregions $6mm $68mm changes nebulizer reduction: 2009 Patient Q1 INC. bidding: (
Slide 19: Strategic paths to growth
Strategic Natural Aging Increasing Lower Attractive HEALTHCARE ROTECH We Equipment Selective – Leverage Layer Maintain 18 Confidential 2009: 2010: Care additional population cost industry $10.5mm $2.3mm About paths stringent purchase existing commission awareness purchases environment to Patient gro
Slide 20: Proven and experienced management team
HEALTHCARE ROTECH We Proven Name Phil President Mike SVP, Steve Rebecca SVP Don Mary 19 Confidential Care Carter Guenette &Distribution Dobbs Clark Alsene Title General and Myers About and President Years experienced Chief Chief Chief CEO Chief Patient Chief Counsel INC. of at Contracts Operating Fi
Slide 21: Financial review
HEALTHCARE ROTECH We 2. 20 Confidential Financial Care About review Patient INC. Care
Slide 22: Financial accomplishments
HEALTHCARE ROTECH We Financial Successfully Reinvested – Initiated Continued 21 Confidential Restructured Recorded Expanded Upgraded Streamlined Care cash About accomplishments wins in ~$52mm proprietary sales transitioned interest operational billing field Patient and INC. andoperations, growth of
Slide 23: Rotech EBITDA bridge
HEALTHCARE ROTECH We Rotech EBITDA ($ 77 2007 2008 Gross Medicare MIPPA Nebulizer Equipment 2009 22 Confidential in 15 Care millions) restructuring adjusted (18) profit successfully 9.5% About bridge 36-month medication 8purchases $82 medication growth EBITDA Patient 18 INC. initiatives (25) rental
Slide 24: Quarterly results and balance sheet statistics
HEALTHCARE ROTECH We Quarterly ($ Q1 Revenue Adj. % Balance Cash Total Credit Debt Net (1) (2) * 23 Confidential See inExcludes margin growth Includes 2009A Care debt EBITDA* millions) /and debt appendix LTM statistics sheet About /438 $119 cash results 17.9% 25.6% LTM 507 Q2EBITDA $5mm $3mm 441 sta
Slide 25: Appendix
HEALTHCARE ROTECH We 24 Confidential Appendix Care About Patient INC. Care
Slide 26: Adjusted EBITDA reconciliation
HEALTHCARE ROTECH We ($ 2007A Net Federal Interest Depreciation Adjustments Goodwill Loss Accounts Restructuring Settlement Non-cash Other Adjusted (1) (2) Note: 25 Confidential inExcludes Includes Care (loss) millions) on Additional adjustments 2008A and expense extinguishment About EBITDA receivab
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