Select Medical Holdings Corporation · NYSE:SEM
Select Medical — Investor Presentation (December 2015)
35 slides from Select Medical's investor presentation, Dec 2, 2015
Slide 1: Forward-Looking Statements
Forward-Looking Statements This presentation may contain forward-looking statements based on current management expectations. Numerous factors, including those related to market conditions and those detailed from time-to-time in the Company’s filings with the Securities and Exchange Commission, may
Slide 2: Select Medical Overview
Headquartered in Mechanicsburg, Pennsylvania, Select Medical employs approximately 40,900 staff in the United States. SCALE AND EXPERTISE Leading provider of post-acute services across 46 states and D.C. Select Medical Overview Note: (1) See Slide 34 for non-GAAP reconciliation Founded in 1996 $3.5
Slide 3: Select Medical's National Footprint
Select Medical’s National Footprint 110 Long-Term Acute Care Hospitals (LTACH) (28 States) 17 Inpatient Rehabilitation Hospitals (8 States) 1,033 Outpatient Rehabilitation Centers (31 States and D.C.) 415 Contract Therapy Locations (28 States and D.C.) 300 Concentra Centers (38 States) 12 2 7 1 4 7
Slide 4: Strategy
Strategy Be the “preferred” provider of post acute care services in our markets Structured relationships to align with patients Partner with academic/major medical institutions Hospital in hospital model in LTACH Experts in our fields – LTACH, Inpatient Rehab, Outpatient Rehab and Occupational Medic
Slide 5: Financial Policy
Financial Policy MINORITY EQUITY IN CONCENTRA DIVIDENDS USE OF CAPITAL (OPPORTUNISTIC) ACQUISITION STRATEGY Highly accretive upon execution of synergies Only in existing and related businesses Execution of put / call to begin end of FY18 (max 33.3% per year) To be funded with cash or stock Board dec
Slide 6: Long-Term Acute Care Specialty Hospitals
Long-Term Acute Care Specialty Hospitals
Slide 7: Select Medical LTAC Hospitals
Select Medical LTAC Hospitals 110 Long-Term Acute Care Hospitals (LTACH) (28 States) As of 9/30/15 3 2 2 1 1 2 2 2 9 2 3 3 11 5 15 9 1 1 1 3 2 5 2 6 1 5 1 10
Slide 8: LTACH Overview
LTACH Overview Major provider of LTACH services in U.S. 110 hospitals 80 hospital-in-hospital (2,885 beds); average size 36 beds 29 freestanding (1,601 beds); average size 55 beds 1 managed hospital Ownership of freestanding LTACHs 17 owned 12 leased
Slide 9: LTACH Legislation
LTACH Legislation LTACH Patient Criteria passed in late December 2013 as part of Budget bill and SGR - effective beginning Q4 2015 LTACH Rates for patients with; 3 day prior short term acute hospital ICU/CCU stay or Ventilation patients for > 96 hours in the LTACH Other patients receive “site neutra
Slide 10: Impact on Select
Impact on Select Positives: Degree of segment certainty with phase-in Select high CMI Hospital-in-hospital strategy Neutral: Moratorium – on new hospitals and beds (with exceptions) through September 30, 2017 Negatives: Potential loss of volume
Slide 11: Patient Criteria Phase-In
Patient Criteria Phase-In HOSPITALS MOVING TO CRITERIA as of 9/30/15>>> 2015 2016 17 HOSPITALS 753 BEDS 37 HOSPITALS 1,343 BEDS 19 HOSPITALS 823 BEDS 36 HOSPITALS 1,567 BEDS Q4 ‘15 Q1 ‘16 Q2 ‘16 Q3 ‘16
Slide 12: Inpatient Rehabilitation Hospitals
Inpatient Rehabilitation Hospitals Inpatient Rehabilitation Specialty Hospitals
Slide 13: Inpatient Rehabilitation Specialty Hospitals
Inpatient Rehabilitation K Specialty Hospitals
Slide 14: Operational Joint Ventures
Operational Joint Ventures Consolidated Joint Ventures: Non-Consolidating Joint Ventures: Dallas, TX 4 IRFs (220 beds) 2 managed units (33 beds) 52 outpatient clinics Scottsdale, AZ 50 bed IRF Columbus, OH 44 bed IRF Atlanta, GA 56 bed IRF 22 outpatient clinics Hershey, PA 76 bed IRF 22 bed TCU St.
Slide 15: JVs Under Construction
JVs Under Construction Cleveland, OH 60 bed IRF (opening late 2015) Currently managing 3 units with 97 total beds Los Angeles, CA 138 bed IRF (opening early 2016) Cincinnati, OH 60 bed IRF (opening 2016) Currently managing 2 units with 46 total beds New Orleans, LA 60 bed IRF (opening 2016) Currentl
Slide 16: Growing Rehabilitation Network
Growing Rehabilitation Network Partner in joint ventures with premier acute care hospitals and systems to build post acute networks 17
Slide 17: Specialty Hospitals Poised for Growth
Specialty Hospitals Poised for Growth LTACH REHAB 2014 2015 2016 2 new LTACHs 1 new LTACH 3 new LTACHs 1 new LTACH 1 new LTACH Begin phase-in of LTACH patient criteria
Slide 18: Outpatient Rehabilitation
Outpatient Rehab Clinics Outpatient Rehabilitation
Slide 19: Outpatient Rehabilitation - Industry
Outpatient Rehabilitation - Industry 1,033 Outpatient Rehabilitation Clinics (31 States and D.C.) Source: Company public filings and websites as of Sept. 30, 2015 Select (1,033) PhysioTherapy Associates (560) USPH (506) ATI (475) 12 7 7 13 2 17 24 15 20 93 1 66 10 46 17 59 8 45 152 2 21 2 21 32 45 1
Slide 20: Outpatient Rehab Clinics: Visits and Revenue per Visit
YEAR 2010 2011 2012 2013 2014 VISITS (000’s) REVENUE PER VISIT $101 4,567 $103 4,470 $103 4,569 $104 4,781 $103 4,971 LTM Q3 ‘15 $103 5,146 CAGR 3.2% Outpatient Rehab Clinics
Slide 21: 2015 Outpatient Initiatives
Continued growth in workers’ comp business by illustrating historical ROI benefits of working with Select Payors/Employers Expand hand therapy services to more clinics Expand concussion management program Continued development of start-up clinics 2015 Outpatient Initiatives
Slide 22: 2015 Outpatient Initiatives
2015 Outpatient Initiatives ae... * Continued growth in workers’ comp business by illustrating historical ROI benefits of working with Select * Payors/Employers * Expand hand therapy services to more clinics * Expand concussion management program * Continued development of start-up clinics Select Me
Slide 23: Concentra Acquisition
Concentra Acquisition Concentra is the leading provider of occupational health with 475 locations across 43 states For the 12 months ended September 30, 2015, Concentra generated approximately $1.0 billion of revenues and $98.4 million of Adjusted EBITDA Three primary service lines: Centers: 300 loc
Slide 24: Post-Acquisition Update
Post-Acquisition Update Management transition Earnings June - September Revenue = $345.8M Adjusted EBITDA = $36.8M Adjusted EBITDA margin = 10.6% Identification of $36 million of cost saving synergies
Slide 25: Concentra Investment Rationale
Concentra Investment Rationale Business well known by both WCAS and Select Complementary to Select’s outpatient rehabilitation business Significant geographic overlap of Concentra centers and Select outpatient clinics Select’s track record of successful acquisitions combined with WCAS’s historical k
Slide 26: Concentra Investment Rationale
Concentra Investment Rationale =... * Business well known by both WCAS and Select * Complementary to Select’s outpatient rehabilitation business * Significant geographic overlap of Concentra centers and Select outpatient clinics * Select’s track record of successful acquisitions combined with WCAS’s
Slide 27: Financial Metric Trends
Financial Metric Trends Net Revenue Adjusted EBITDA CAGR 8.2% CAGR 4.4% $2,390 $2,805 $2,949 $2,976 $3,065 $307 $386 $406 $373 $364 ($ in millions) ($ in millions) $3,475 $377 1 Decline in FY13 and FY14 Adjusted EBITDA was mainly attributable to impacts of sequestration and start-up costs associated
Slide 28: Annual Capital Expenditures
($ in millions) Annual Capital Expenditures Accelerated development spending expected 2014-2015 $52 $46 $68 $74 $95 $0 $25 $50 $75 $100 $125 $150 2010 2011 2012 2013 2014 LTM Q3 '15 Maintenance Development $136
Slide 29: Debt Maturities
Debt Maturities ($ in millions) As of September 30, 2015 $1 $285 $9 $698 $4 $5 $714 $421 $200 $0 $200 $400 $600 $800 $1,000 2015 2016 2017 2018 2019 2020 2021 2022 2023 SEM Revolver (L + 3.75%) SEM Term Loan E (L + 2.75% - 1% floor) SEM Term Loan D (L + 2.75%) SEM Senior Notes 6.375% Concentra 1st L
Slide 30: Focus on Free Cash Flow Generation
($ in millions) Note: Free Cash Flow calculated as Net Cash Provided by Operating Activities less Purchases of Property and Equipment See Slide 34 for non-GAAP reconciliation Free Cash Flow Focus on Free Cash Flow Generation $93 $171 $231 $119 $75 $86 2010 2011 2012 2013 2014 LTM Q3 '15
Slide 31: 2015 Financial Guidance
Net Revenue $3,675M - $3,725M Adjusted EBITDA $400M - $410M Adjusted EPS $0.92 - $0.97 2015 Financial Guidance Note: Includes $575 million net revenue and $55 million Adjusted EBITDA contribution from Concentra
Slide 32: Appendix: Additional Materials
Appendix: Additional Materials
Slide 33: Non-GAAP Reconciliation
Non-GAAP Reconciliation ($ in millions) 2010 2011 2012 2013 2014 Q3 ’14 YTD Q3 ’15 YTD LTM Q3 ’15 Net Income $82 $113 $154 $123 $128 $100 $110 $138 (+) Income tax 42 71 90 75 76 64 65 77 (+/-) Equity in losses/(earnings) of unconsolidated subsidiaries 1 (3) (8) (2) (7) (4) (13) (16) (+/-) Other expe
Slide 34: selectmedical.com/investor-relations/for-investors
selectmedical.com/investor-relations/for-investors
Slide 35: Select Medical - Improving Quality of Life
SP... MEDICAL Improving Quality of Life selectmedical.com/investor-relations/for-investors
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