Encompass Health Corporation · NYSE:EHC
Encompass Health — UBS Global Healthcare Conference 2013
18 slides from Encompass Health's conference presentation, May 22, 2013
Slide 1: UBS Global Healthcare Conference
UBS Global Healthcare Conference New York City│May 22, 2013 Jay Grinney, President and Chief Executive Officer
Slide 2: Forward-Looking Statements
Forward-Looking Statements The information contained in this presentation includes certain estimates, projections and other forward- looking information that reflect our current outlook, views and plans with respect to future events, including legislative and regulatory developments, strategy, capit
Slide 3: Our Company
Our Company Portfolio – As of May 15, 2013 Inpatient Rehabilitation Hospitals (“IRF”) 102 • 30 operate as JV’s with Acute Care Hospitals Outpatient Rehabilitation Satellite 22 Clinics 25 Hospital-Based Home Health Agencies 28 + Puerto Rico Number of States ~ 23,000 Employees Key Statistics – Trailin
Slide 4: Q1 2013 Highlights
Q1 2013 Highlights Discharge Volume (million) Net Operating Revenues 40,000 $600 +6.3% +4.1% $572.6 32,130 30,871 $538.6 20,000 0 $300 Q1 2013 Q1 2012 Q1 2013 Q1 2012 (million) Adjusted EBITDA (1) Earnings Per Share (2) $0.80 $160 +9.7% $139.3 $127.0 +20.0% $80 $0.40 $0.48 $0.40 $0 $0.00 Q1 2013 Q1
Slide 5: Highlights
Highlights Completed tender offer of common shares ― Approx. 9.5%, or 9,119,450, of our common shares were purchased at $25.50 per share. ― Total cost of approx. $234 million (including fees and expenses related to the tender) ― Funded with $152 million cash on hand and an approx. $82 million draw
Slide 6: Adjusted Free Cash Flow
Adjusted Free Cash Flow (1) 2013 reflects: Continued spending on the CIS and hospital refresh projects Completion of delevering and refinancing Certain Cash Flow Items (2) 2013 Q1 2013 2012 Adjusted Free Cash Flow(1) (millions) Assumptions Actuals Actuals $309 Cash interest expense (3) $92 to
Slide 7: Priorities for Free Cash Flow
Priorities for Free Cash Flow (millions) 2013 Q1 2012 Priorities may shift based on prevailing market Growth in core business Assumptions 2013 Actuals Bed expansions (target approx. 80 beds/yr) $25 to $35 $4.4 $16.6 De novo hospitals (target 4/yr) $55 to $75 11.1 41.1 Growth Acquisitions (target 2/y
Slide 8: IRF-PPS Fiscal Year 2014 Proposed Rule: Key Provisions
IRF-PPS Fiscal Year 2014 Proposed Rule: Key Provisions HealthSouth Observations Update to Payment Rates Pricing: • The proposed rule would implement a net 1.8% market basket increase. • In line with expectations. Net pricing ― 2.5% market basket increase impact to HealthSouth expected to ― (30 bps)
Slide 9: Business Outlook: 2013 to 2015
Business Outlook: 2013 to 2015 (1) CAGRs reflect: Business Model • Completion of delevering and refinancing • Adjusted EBITDA CAGR: 4-8% (2) • Sequestration beginning March 2013 • Adjusted Free Cash Flow CAGR: 10-14% (2)(3) Strategy 2012 2013 2014 2015 Purchased $46 million Shareholder • Completed $
Slide 10: Strong and Sustainable Business Fundamentals
Strong and Sustainable Business Fundamentals • Favorable demographic trends Attractive Healthcare Sector • Nondiscretionary nature of many conditions treated in IRFs • Highly fragmented industry • #1 market share: above industry same-store growth and margins Industry Leading Position • Consistent ac
Slide 11: Appendix
Appendix HEALTHSOUTH,
Slide 12: Historic Discharge Growth vs. Industry
Historic Discharge Growth vs. Industry HealthSouth’s volume growth has outpaced competitors’ Same Store HealthSouth vs. Industry Quarterly Discharge Growth 140,000 Yearly UDS Industry Sites (1) 6.5% 120,000 Q4 HLS Same Store (2) 5.0% 100,000 2.1% 5.4% 3.3% 2.9% 4.7% 5.9% 2.2% Q3 1.8% 1.0% 1.4% 1.9%
Slide 13: Our Cost-Effectiveness: IRF-PPS Outlier Payments by Decile
Our Cost-Effectiveness: IRF-PPS Outlier Payments by Decile (1) # of Hospitals Total Outlier Payments Avg Outlier Payment per Discharge Less Hospital Deciles HLS Non-HLS Total HLS Non-HLS Total % HLS Non-HLS Total 90-100 - 113 113 $ - $ 104,345,905 $ 104,345,905 50.9% N/A $ 2,187 $ 2,187 80-90 1 113
Slide 14: Adjusted Free Cash Flow
Adjusted Free Cash Flow Q1 Full Year (Millions) 2013 2012 2012 2011 2010 2009 Net cash provided by operating activities $ 121.4 $ 81.0 $ 411.5 $ 342.7 $ 331.0 $ 406.1 Impact of discont inued operat ions 0.7 (0.4) (2.0) (9.1) (13.2) (5.7) Net cash provided by operating 122.1 80.6 409.5 333.6 317.8 40
Slide 15: Reconciliation of Net Income to Adjusted EBITDA
(1) Reconciliation of Net Income to Adjusted EBITDA 2013 Q1 (in millions, except per share data) Total Per Share Net income $ 65.9 Loss from disc ops, net of tax, attributable to HealthSouth 0.4 Net income attributable to noncontrolling interests (14.6) Income from continuing operations attributable
Slide 16: Reconciliation of Net Income to Adjusted EBITDA
(1) Reconciliation of Net Income to Adjusted EBITDA 2012 Q1 Q2 Q3 Q4 Full Year (in millions, except per share data) Total Per Share Total Per Share Total Per Share Total Per Share Total Per Share Net income $ 56.8 $ 59.9 $ 59.9 $ 59.3 $ 235.9 Loss (income) from disc ops, net of tax, attributable to
Slide 17: Reconciliation Notes for Slides 15-16
Reconciliation Notes for Slides 15-16 1. Adjusted EBITDA is a non-GAAP financial measure. The Company’s leverage ratio (total consolidated debt to Adjusted EBITDA for the trailing four quarters) is, likewise, a non- GAAP financial measure. Management and some members of the investment community util
Slide 18: Net Cash Provided by Operating Activities Reconciled to Adjusted EBITDA
Net Cash Provided by Operating Activities Reconciled to Adjusted EBITDA Q1 Full Year (Millions) 2013 2012 2012 Net cash provided by operating activities $ 121.4 $ 81.0 $ 411.5 Prov ision for doubtful accounts (7.4) (6.3) (27.0) Professional fees—accounting, tax, and legal 1.4 3.6 16.1 Interest expen
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