Encompass Health Corporation · NYSE:EHC
Encompass Health — HealthSouth — Thomas Weisel Conference 2006
16 slides from Encompass Health's conference presentation, Sep 6, 2006
Slide 1: Unlocking Value
Unlocking Value Thomas Weisel Conference September 6, 2006 Boston, MA
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 views with respect to future events and financial performance. These estimates, projections and other forward-looking infor
Slide 3: Where we’ve been…. Company’s Prior History
Where we’ve been…. Company’s Prior History Q3-02 SEC securities trading investigation Q1-03 DOJ criminal investigation SEC files lawsuit vs. HealthSouth and prior Management Scrushy removed Q2-03 DOJ civil investigation Line-of-Credit frozen; default claimed Payment blockage by lenders Bondholders d
Slide 4: Where We Are: Diversified Healthcare Services Provider
Where We Are: Diversified Healthcare Services Provider National Provider of Healthcare Services Diversified Business Portfolio (b) : % of Net Operating Revenues Diagnostic Other 6.6% 0.9% The Company is a leader in each of its four major Outpatient operating divisions 11.1% Inpatient Surgery 57.0% 2
Slide 5: Inpatient Division – Overview
Inpatient Division – Overview Overview Payor Mix for the six months ended 6/30/2006 Nation's largest provider of inpatient rehabilitation services 202 locations (94 IRFs, 98 outpatient satellites) IRFs provide comprehensive, interdisciplinary services to patients who require intensive institutional
Slide 6: Surgery Division – Overview
Surgery Division – Overview Overview Payor Mix for the six months ended 6/30/2006 One of nation’s largest operators of ambulatory surgery centers 153 facilities Typical surgery center is a freestanding facility with two to six fully equipped operating and procedure rooms and ancillary areas for rece
Slide 7: Outpatient Division – Overview
Outpatient Division – Overview Overview Payor Mix for the six months ended 6/30/2006 Nation's second largest provider of outpatient rehabilitation services 606 locations Facilities offer a comprehensive range of outpatient rehabilitative healthcare services, including physical therapy and occupation
Slide 8: Diagnostic Division – Overview
Diagnostic Division – Overview Overview Payor Mix for the six months ended 6/30/2006 Nation’s second largest operator of freestanding diagnostic imaging centers 76 locations Operates fixed site diagnostic imaging centers that provide imaging services to patients in a variety of modalities including
Slide 9: Where We’re Going…
Metrics Where We’re Going… Volume growth Margin expansion Debt reduction TODAY Phase 3 24 to 48 months Operational, development, Phase 2: and new business focus 12 to 36 months Pay down debt Phase 1: Operational and development focus 0 to 24 months Pay down debt Operational focus Time Mitigate 75% R
Slide 10: Post-Acute Market Opportunity
Post-Acute Market Opportunity The Post-Acute Market is Sizeable and Remains Highly Fragmented Post-Acute Usage After Hospital Discharge Post-Acute Growth Opportunity Segment Projected Growth Inpatient Rehab Facilities (IRF) 4-6% Post Acute Care 33% Home Health 5-9% Hospice 12-15% No Post Acute Care
Slide 11: Unlocking Value: Rationale
Unlocking Value: Rationale There are no strategic or financial synergies among the divisions Historic connection = orthopedic care This is no longer consistent with current realities Orthopedic surgeons used to: Today Orthopedic Surgeons: Admit knees/hips to our rehab Cannot admit their knee/hip pat
Slide 12: Unlocking Value: Rationale
Unlocking Value: Rationale HealthSouth’s existing divisions compete in sectors with solid growth potential Above-average opportunities exist in Inpatient / Post-Acute and Surgery sectors - require significant additional CAPEX The Company is highly leveraged - precludes raising new debt - new equity
Slide 13: Unlocking Value: Remaining Company
Unlocking Value: Remaining Company Divestitures will create a “pure-play” positioning in post-acute care Post divestiture, HealthSouth’s growth will occur through organic and development initiatives 2-3% Pricing Organic* 1-2% SS Volume *After full implementation of 75% Rule Current IRF/LTCH developm
Slide 14: Unlocking Value: Remaining Company
Unlocking Value: Remaining Company Inpatient business has strong cash flow characteristics Inpatient Division ($ in millions) YTD 6/30/06 2005 Net Operating Revenues $899.9 $1,810.4 Operating Earnings 194.4 393.0 (1) Corporate OH (as a % of revenue) (38.2) (76.9) Depreciation 32.4 66.4 Available Cas
Slide 15: Summary
Summary HealthSouth has emerged from a period of unprecedented uncertainty and upheaval with a new Board, a new management team, a new balance sheet and a new direction. By divesting its non-core assets, the Company will be well-positioned to become a “pure-play” post-acute provider and a consolidat
Slide 16: Appendix: Non-GAAP Financial Reconciliations
Appendix Non-GAAP Financial Reconciliations A reconciliation of net loss to Adjusted Consolidated EBITDA for the six A reconciliation of Adjusted Consolidated EBITDA to net cash used in operating months ended June 30, 2006 is as follows: activities for the six months ended June 30, 2006 is as follow