Select Medical Holdings Corporation · NYSE:SEM
Select Medical — Investor Presentation (May 2018)
33 slides from Select Medical's investor presentation, May 8, 2018
Slide 1: Forward-Looking Statements
Forward-Looking Statements This presentation may contain forward-looking statements based managementexpectations.Numerousfactors,includingthose market conditions and those detailed from time-to-time in the on current relatedto Company’s filings with the Securities and Exchange Commission, may cause
Slide 2: Select Medical Overview
Select Medical Overview Founded in 1996 $4.5 Billion Net Revenue LTM Q1 2018 $562 Million Adjusted EBITDA 2017 (1) 12.4% Adjusted EBITDA Margins SCALE AND EXPERTISE Leading provider of post-acute services with operations in 47 states and D.C. Headquartered in Mechanicsburg, Pennsylvania, Select Medi
Slide 3: Recent Events
Recent Events Baylor Joint Venture On May 3, 2018 Select and Baylor Scott & White Health announced planned expansion into the Austin Texas area with the acquisition of a 36 bed rehabilitation hospital. Ochsner Rehabilitation Hospital On May 1, 2018 Select and Ochsner Health opened the joint ventures
Slide 4: Revenue Mix
Revenue Mix 2017 Proforma 2017 2014 Contract Therapy 7% Outpatient 20% Occ Med 23% LTACH 40% OCC Med 32% LTACH 35% LTACH 60% IRF 13% Outpatient 23% Outpatient 20% IRF 13% IRF 14% Note: 2017 Proforma includes US HealthWorks 6
Slide 5: Payor Mix
Payor Mix 2017 Proforma 2017 2014 Medicare 27% Medicare 30% Medicare 45% Non Medicare 55% Non Medicare 70% Non Medicare 73% Note: 2017 Proforma includes US HealthWorks 7
Slide 6: Long-Term Acute Care Hospitals
LONG-TERM ACUTE CARE HOSPITALS
Slide 7: LTACH Legislation
LTACH Legislation LTACH Patient Criteria passed in late December 2013 as part of Budget bill and SGR - effective beginning Q4 2015 –All LTACH’s under criteria as of September 2016. LTACH Rates for patients with; –3 day prior short term acute hospital ICU/CCU stay or –Ventilation patients for > 96 ho
Slide 8: LTACH Medicare Annual Spending
LTACH Medicare Annual Spending 5.6 5.4 5.4 5.2 5.0 4.8 4.6 4.4 4.2 2010 2011 2012 2013 2014 2015 2016 2017 ($ in billions) Source: MedPAC Data (2016 & 2017 Figures estimated by MedPac) 10 5.3 5.2 5.0 5.0 4.8 4.7 4.6
Slide 9: LTACH Criteria Impact
LTACH Criteria Impact Average Daily Census 3,200 $1,800 Case Mix Index LTACH Revenue PPD 1.26 1.27 3,000 $1,750 $1,704 2,811 $1,700 2,800 2,677 2,665 $1,663 2,712 1.20 $1,650 2,600 2,634 1.19 1.19 $1,600 2,400 $1,570 $1,550 2,200 $1,558 $1,520 $1,500 (Rate) 2,000 (ADC1) 2013 2014 2015 2016 2017 1 AD
Slide 10: Inpatient Rehabilitation Hospitals
INPATIENT REHABILITATION HOSPITALS
Slide 11: Our Rehabilitation "Model"
Our Rehabilitation “Model” • Partner with leading health systems through joint venture relationships – Inpatient rehab is the basis of “model” but can include other post acute network of services. – – – – Outpatient Rehab LTACH Day Rehab Occupational Medicine 13
Slide 12: Current Rehabilitation Operations
Current Rehabilitation Operations [JCleveland Clinic Rehabliitation Hospital ..ilfiiiltictl WCfl Sef!ld Uedcll _uJI' O·luh-ioHealth Rehabil itation Hospital In partners-hlp with Select Mtdiul STATE HERSHEY 1 1-'tNRI' ehabilitation · Hospital SSM Rehabilitation Network INSTITUTE FOR REHABIUTATION Se-
Slide 13: Rehabilitation Network Growth
Rehabilitation Network Growth New JV Partnerships: Under Construction • Ochsner New Orleans – New 56 bed IRF • Opened May 2018 • Dignity Las Vegas, NV – New 60 bed IRF • Projected opening in 2019 Signed Riverside Health – Newport News, VA • • • New 50 bed IRF to replace existing hospital Constructio
Slide 14: Our Post Acute Partners
Our Post Acute Partners Multi-billion dollar health system with 52 acute care hospitals and over 4,800 staffed acute beds. Net patient revenues of approximately $7 billion Three IRFs with 178 beds and two managed rehab units, 64 outpatient clinics and home health services 2011 facility and staffing
Slide 15: Physical Therapy Outpatient Clinics
PHYSICAL THERAPY OUTPATIENT CLINICS
Slide 16: Outpatient Rehabilitation
Outpatient Rehabilitation • Largest operator of outpatient rehab clinics in U.S. • March 2016 acquired Physiotherapy Associates (second largest at time of acquisition) • Growth through denovo clinics and tuck-in acquisitions • Bipartisan Budget Act of 2018 repealed annual limits on outpatient therap
Slide 17: Outpatient Rehabilitation - Industry
Outpatient Rehabilitation - Industry Source: Company public filings and websites as of March 31, 2018 1,617 Outpatient Rehabilitation Clinics (37 States and D.C.) As of 03/31/2018 19 ATHLETICO (≈400) ATI (≈542) USPH (580) Select (1,617)
Slide 18: Outpatient Rehab Clinics
Outpatient Rehab Clinics 20 VISITS (000'S) 8,233 7,799 5,219 4,971 4,781 YEAR 2013 2014 2015 2016 2017 101 101 101 100 101 REVENUE PER VISIT
Slide 19: Outpatient Rehab Clinics
Outpatient Rehab Clinics a... CAGR 14.0% VISITS (000'S) YEAR 2013 2014 2015 2016 2017 REVENUE PER VISIT Select Medical: Improving Quality of Life
Slide 20: Concentra/US HealthWorks
Concentra/US HealthWorks The largest provider of occupational the U.S. – 687 locations across 44 states health services in • Service Lines: – – – 531 occupational health centers 124 onsite clinics at employer locations 32 Community Based Outpatient Clinics Veterans Health Administration patients (CB
Slide 21: Concentra/US HealthWorks Footprint
Concentra/US HealthWorks Footprint WA e ME MT NO MN VT ONH......O tv\A-o OR CD WI 0 NY so ID G • Ml f) cr, 0 WY .• CDPA 0 lA NE NJO NV OHCD MD o 'L ""......, C:f',,EO IN UT wv 0 co CA "'·oc 0 VA KS MO G KY 0 NC G 0 TN Ci) AZ Concentra@ 531Centers OK 0 0 sc AR 0 NM GA AL MS 0 TX LA 0 G) FL AK G As of
Slide 22: Concentra Stand Alone Post-Acquisition from Humana
Concentra Stand Alone Post-Acquisition from Humana • Financial Information 2015 (acquired June 2015) – – – Revenue = $997 million Adjusted EBITDA = $90 million Adjusted EBITDA Margin = 9.0% • Financial Information 2017 – – – Revenue = $1.0 billion Adjusted EBITDA= $157.6 million Adjusted EBITDA Marg
Slide 23: US HealthWorks Acquisition
US HealthWorks Acquisition US HealthWorks was the second largest occupational health with 220 centers in States. provider of the United • Transaction closed February 1, 2018. Select retains its 50.1% voting ownership in combined company. US HealthWorks Financial Performance 2017 • – – – Revenue = $5
Slide 24: US HealthWorks Acquisition
US HealthWorks Acquisition =... MEDICAL US HealthWorks was the second largest provider of occupational health with 220 centers in the United States. ¢ Transaction closed February 1, 2018. Select retains its 50.1% voting ownership in combined company. US HealthWorks Financial Performance 2017 — Reven
Slide 25: Financial Metric Trends
Financial Metric Trends Adjusted EBITDA(1) Net Revenue $562 $538 $4,527 $4,365 $4,217 2014 2015 2016 Outpatient 2017 LTM Q1 18 2014 2015 2016 Outpatient 2017 LTM Q1 18 LTACH IRF Concentra LTACH IRF Concentra ($ in millions) ($ in millions) Note: (1) See Slide 32 for non-GAAP reconciliation 27 $3,684
Slide 26: Annual Capital Expenditures
Annual Capital Expenditures $225 $200 $175 $150 $125 $100 $75 $50 $25 $0 2014 2015 Maintenance 2016 Development 2017 Concentra Q1 2017 Systems Q1 2018 (1) Excludes development capital related to the recapture of capital expenditures of $7M from 2016 and $36M from 2017 that Select funded on an interi
Slide 27: Debt Maturities as of 03/31/2018
Debt Maturities as of 03/31/2018 SEM Revolver (L + 2.75%) $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $0 2018 2019 2020 2021 2022 2023 2024 2025 Note: New SEM Revolver and Term loans have springing maturity feature and become due in early 2021 unless SEM Senior Notes are refinanced prior to. 29
Slide 28: Financial Guidance
Financial Guidance 2018 Net Revenue $5,000M - $5,200M Adjusted EPS Adjusted EBITDA $630M - $660M $1.08 $1.12 $0.93 $0.97 - - EPS Note: See Slide 33 for non-GAAP reconciliation 30
Slide 29: Appendix: Additional Materials
Appendix: Additional Materials
Slide 30: Non-GAAP Reconciliation
Non-GAAP Reconciliation 2014 $128 2015 $136 2016 $125 2017 $220 LTM Q1 18 Net Income $241 Income tax expense (benefit) 76 72 56 (18) (19) Equity in losses/(earnings) of unconsolidated subsidiaries (7) (17) (20) (21) (20) Interest expense, net 86 113 170 155 161 Loss on debt retirement 2 - 12 20 10 O
Slide 31: Financial Guidance Non-GAAP Reconciliation
Financial Guidance Non-GAAP Reconciliation Range Low High Net income attributable to Select Medical Net income attributable to non-controlling interests Net income Income tax expense Interest expense Equity in earnings of unconsolidated subsidiaries Loss on early retirement of debt Income from opera
Slide 32: selectmedical.com/investor-relations/for-investors
selectmedical.com/investor-relations/for-investors
Slide 33: Select Medical: Improving Quality of Life
. MEDICAL = Improving Quality of Life selectmedical.com/investor-relations/for-investors
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