Select Medical Holdings Corporation · NYSE:SEM
Select Medical — Bank of America Merrill Lynch Health Care Conference 2010
20 slides from Select Medical's conference presentation, May 12, 2010
Slide 1: Bank of America Merrill Lynch Health Care Conference
Bank of America Merrill Lynch Health Care Conference May 12, 2010
Slide 2: Disclosure
Disclosure 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 cause results to
Slide 3: Select Medical At A Glance
Select Medical At A Glance 89 LTAC Hospitals with 3,782 beds in 25 States 6 Inpatient Rehab Facilities (IRF) with 463 beds in 4 States and 1 Managed Rehab Unit 959 Outpatient Rehab Clinics in 36 States and the District of Columbia 482 Contract Therapy locations in 27 states 22,400 Employees in the U
Slide 4: Balanced Payor Mix
Balanced Payor Mix Specialty Payor Mix Outpatient Payor Mix Overall Payor Mix (2005 - 2009) Medicare/ Medicaid 10% Commercial Payors and Other 34% Note: As of December 31, 2009
Slide 5: Strong Track Record of Growth
(2003) (1999) Strong Track Record of Growth Company has Struck the Right Balance of Both Organic and Acquisitive Growth De Novo - 62 specialty hospitals and 276 outpatient clinics opened since inception - 2009 Acquisitions - 62 specialty hospitals acquired since inception - 2009 ATH and Intensiva (1
Slide 6: Growth Strategy
Growth Strategy LTAC - maturing of new hospitals Inpatient Rehab - Joint Venture/Acquisition opportunities Outpatient Rehab - margin improvement
Slide 7: Maturing New Hospitals
Maturing New Hospitals New Hospitals Added 2008-09 ? 10 LTACs and 2 Rehab Adjusted EBITDA 2008 ($25.0) M Adjusted EBITDA 2009 ($ 1.6) M
Slide 8: Inpatient Rehab Facility JV Strategy
Inpatient Rehab Facility JV Strategy Potential IRF JV Partner Profile Leading health care systems and/or university hospitals Services Provided: Rehab Annual Revenue: > $1 billion Beds: > 400 Patient Volume: High Geography: > 750,000 population
Slide 9: SSM Rehab Joint Venture
SSM Rehab Joint Venture The Partners SSM Health Care St. Louis network with seven acute care hospitals, 12,000 employees, 2,500 staff physicians Select Medical 51% owner of joint venture with management responsibility The Services 80 inpatient rehab beds 33 outpatient locations (18 SSM, 15 Select) 6
Slide 10: Outpatient Strategy
Outpatient Strategy Continue to expand former HealthSouth clinics' EBITDA margins 2008 EBITDA margin differential - greater than 7% 2009 EBITDA margin differential - greater than 5% Former HealthSouth clinics' revenue - ^ $200M Contract renewals Lease renewals
Slide 11: Regulatory Environment
Regulatory Environment Long Term Care Hospitals - stable through 2012 Inpatient Rehab - stable Outpatient Rehab - stable
Slide 12: LTAH Rates under Proposed FY 2011 Regulation
LTAH Rates under Proposed FY 2011 Regulation Decrease in FY 2011 Base Rate by 0.1% Market basket 2.4% minus coding adjustment of 2.5% Final rule August implementation October 1, 2010
Slide 13: Financial Overview
Financial Overview
Slide 14: Historical Net Revenue
$2,240 $2,153 $1,992 Historical Net Revenue Note: In Millions CAGR 6.0%
Slide 15: Historical Adjusted EBITDA
Note: In Millions Historical Adjusted EBITDA $330 $270 $255 CAGR 13.8%
Slide 16: Free Cash Flow
Free Cash Flow Free Cash Flow1 Note: Free Cash Flow calculated as Net Cash Provided by Operating Activities less Purchases of Property and Equipment 1 See slide 19 for non-GAAP reconciliation Intense Focus on Free Cash Flow Generation ($ in millions)
Slide 17: Capitalization Details
Capitalization Details IPO Proceeds were used to Repay Existing Indebtedness ($ in millions) 1 See slide 19 for non-GAAP reconciliation
Slide 18: 5-Year Strategic Goals
5-Year Strategic Goals Adjusted EBITDA growth of 8 - 10% per year Adjusted EBITDA margin improvement of 6% per year over this period Capital spending of $50 - $60 million per year Free cash flow per year of $120 million Bring leverage levels down to < 2.0x by 2014
Slide 19: Non-GAAP Reconciliation
2006 2007 2008 2009 Net Income $ 118 $ 55 $ 22 $ 75 (-) Discontinued ops, net of tax (13) - - - (+) Non-controlling interest 1 2 3 4 (+) Income tax 56 29 26 37 (+/-) Other expense / (income) (1) 5 - 1 (+) Interest expense, net 96 103 146 132 (-) Gain on debt retirement - - (1) (13) (+) Depreciation
Slide 20: Select Medical Corporation
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