Encompass Health Corporation · NYSE:EHC
Encompass Health — HealthSouth — Q1 2009 Earnings Presentation
26 slides from Encompass Health's earnings presentation, May 4, 2009
Slide 1: First Quarter 2009 Earnings Call Supplemental Slides
First Quarter 2009 Earnings Call Supplemental Slides 1
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 info
Slide 3: Table of Contents
Table of Contents Highlights…………………………………………………………………………………………….. 4 Revenues ………………………………………………………………………………………….... 5 Expenses ……………………………………………………………………………………………. 6 Adjusted Consolidated EBITDA …….……………………………….………………………….... 7 Adjusted Income per Share ……….…………………………………………………………….... 8 Free Cash Fl
Slide 4: Highlights: Q1 2009
Highlights: Q1 2009 Achieved 5.7% quarter-over-quarter discharge growth. – Same store discharge growth was 4.8%. Revenue growth of 2.3%. – Driven by higher discharge volume which more than offset the Medicare price roll-back and lower outpatient revenue. Cost-effective, high-quality patient care. –
Slide 5: Revenues (Q1 2009 vs. Q1 2008)
Revenues (Q1 2009 vs. Q1 2008) Favorable/ (Unfavorable) (Millions) 1st Qtr. 2009 1st Qtr. 2008 Change Inpatient $ 433.1 $ 419.1 3.3% Outpatient and other 42.0 45.1 (6.9%) Consolidated net operating $ 475.1 $ 464.2 2.3% (Actual Amounts) Discharges 27,807 26,309 5.7% Net patient revenue / discharge $
Slide 6: Expenses (Q1 2009 vs. Q1 2008)
Expenses (Q1 2009 vs. Q1 2008) Favorable/ (Unfavorable) (Millions, except percent) 1st Qtr. 2009 1st Qtr. 2008 Change Salaries and benefits $ 234.7 $ 230.4 (1.9%) Percent of net operating revenues 49.4% 49.6% 20 bps EPOB (employee per occupied bed) 3.47 3.53 1.7% Hospital related expenses $ 114.6 $
Slide 7: Adjusted Consolidated EBITDA
Adjusted Consolidated EBITDA(1) (Millions) 1st Qtr. 1st Qtr. Change 2009 2008 $ % $ 98.7 $ 89.2 $ 9.5 10.7% • Strong volume growth in Q109 helped offset the Medicare price roll-back. – Medicare market basket update: $7-8 million benefit in Q108. • Quarter-over-quarter improvement driven by: √ Increa
Slide 8: Adjusted Income per Share
Adjusted Income per Share 1st Qtr. 1st Qtr. Change (Millions, except per share data) 2009 2008 $ % Income from continuing operations attributable to HealthSouth $ 48.0 $ 4.6 $ 43.4 943.5% Adjusted income from continuing operations (1) $ 39.8 $ 17.0 $ 22.8 134.1% Per Share Adjusted income from contin
Slide 9: Free Cash Flow
Free Cash Flow Three Months Ended March 31, (Millions) 2009 2008 Net cash provided by operating activities $ 183.1 $ 41.8 Incremental income tax expense (0.3) (1.4) Capital expenditures for maintenance(1) (7.5) (8.7) Net settlements on interest rate swap (8.5) (0.2) Dividends paid on convertible per
Slide 10: Debt Reduction
Debt Reduction • No near-term refinancing ($ Billions) Debt Outstanding(1) $3.5 – Revolver = 2012 $3.40 – Term Loan = 2013 $3.0 – Bonds = 2014 & 2016 $2.5 $2.0 • Future deleveraging: $2.04 $1.81 $1.73 – Excess cash from operations $1.5 – Derivative proceeds $1.0 UBS Settlement; net recovery $0.5 of
Slide 11: Liquidity
Liquidity (Millions) March 31, 2009 December 31, 2008 Cash Available $ 90.7 $ 32.2 Revolver Total line $ 400.0 $ 400.0 Less: – Draws - (40.0) – Letters of credit - (52.7) Available $ 400.0 $ 307.3 Total Liquidity (available cash and revolver) $ 490.7 $ 339.5 11
Slide 12: 2009 Guidance
2009 Guidance Adjusted Consolidated EBITDA(1) • 2009 Range: $342.0 million to $352.0 million – Expect to be at the higher end of the range Adjusted Earnings per Share(1)(2) • 2009 Range: $0.85 to $0.90 per share – Expect to be at the higher end of the range Key Drivers: Sustainable discharge growth
Slide 13: Appendix
Appendix 13
Slide 14: Revenues (Sequential)
Revenues (Sequential) Favorable (Unfavorable) (Millions, except percent) 1st Qtr. 2009 4th Qtr. 2008 Change Inpatient $ 433.1 $ 418.4 3.5% Outpatient and other 42.0 44.6 (5.8%) Consolidated net operating $ 475.1 $ 463.0 2.6% (Actual Amounts) Discharges 27,807 27,654 0.6% Net patient revenue / discha
Slide 15: Expenses (Sequential)
Expenses (Sequential) Favorable (Unfavorable) (Millions, except percent) 1st Qtr. 2009 4th Qtr. 2008 Change Salaries and benefits $ 234.7 $ 233.7 (0.4%) Percent of net operating revenues 49.4% 50.5% 110 bps EPOB (employee per occupied bed) 3.47 3.64 4.7% Hospital related expenses $ 114.6 $ 112.7 (1.
Slide 16: Operational and Labor Metrics
Operational and Labor Metrics Three Months Ended March 31, 2009 2008 (In Millions) Net patient revenue-inpatient $ 433.1 $ 419.1 Net patient revenue-outpatient and other revenues 42.0 45.1 Net operating revenues $ 475.1 $ 464.2 (Actual Amounts) (1) Discharges 27,807 26,309 Outpatient visits 285,101
Slide 17: Payment Sources
Payment Sources Three Months Ended March 31, 2009 2008 Medicare 68.6% 68.2% Medicaid 2.1% 2.3% Workers' compensation 1.7% 2.2% Managed care and other discount plans (1) 22.2% 21.3% Other third-party payors 3.2% 3.5% Patients 0.8% 0.8% Other income 1.4% 1.7% Total 100.0% 100.0% (1) Medicare Advantage
Slide 18: Debt Maturities
Debt Maturities (Millions) $1,000 $910.7 $900 $800 $737.5 $700 $600 $500 Undrawn revolver $400.0 $400 goes away in 2012 $300 $200 $100 $16.2 $21.9 $21.2 $20.6 $0 2009 2010 2011 2012 2013 Thereafter • Minimal amortization and no near-term financing risk. • As of March 31, 2009, we were in compliance
Slide 19: Interest Rate Swaps
Interest Rate Swaps (Millions) Floating Floating Rate Debt Balances March 31, 2009 Interest Rate Advances under $400 million revolving credit facility $ - Libor plus 325(1) Term loan facility 757.1 Libor plus 250(1) Floating Rate Senior Notes due 2014 350.6 6 month Libor +6% Total $ 1,107.7 Swap Set
Slide 20: Debt Schedule
Debt Schedule Debt Balances March 31, December 31, Q109 Debt (Millions) 2009 2008 Reduction(1)(2) Advances under $400 million revolving credit facility, March 2012 $ - $ 40.0 $ (40.0) Term loan facility - March 2013 757.1 783.6 (26.5) Bonds Payable: 8.375% Senior Notes due 2011 0.3 0.3 - 7.625% Seni
Slide 21: Non-Operating Cash/Tax Position
Non-Operating Cash/Tax Position Cash Refunds Future Cash Tax Payments • Federal tax recoveries virtually complete. • Expect to pay about $5-7 million per year of – Approx. $42 million received in Q109. income tax. – State income tax • State tax refunds in progress. – Alternative Minimum Tax (AMT) –
Slide 22: Outstanding Share Summary
Outstanding Share Summary 1st Qtr.(4) 1st Qtr. Year-End(4) Year-End (Millions) 2009 2008 2008 2007 Average for the Period Basic shares outstanding(2)(3) 87.5 78.9 83.0 78.7 (1)(2)(3) Diluted shares outstanding 100.9 92.3 96.4 92.0 End of Period (2)(3) Basic shares outstanding 88.3 79.1 88.0 78.7 Dil
Slide 23: First Quarter Reconciliation of Net Income to Adjusted Income and EBITDA
First Quarter Reconciliation of Net Income to Adjusted Income from Continuing Operations and Adjusted Consolidated EBITDA(1)(3) Three Months Ended Three Months Ended (In Millions, Except Per Share Data) March 31, 2009 March 31, 2008 (2) (2) Per Share Per Share Net income $ 53.5 $ 0.61 $ 26.4 $ 0.33
Slide 24: 2008 Year-End Reconciliation of Net Income to Adjusted Income and EBITDA
2008 Year-End Reconciliation of Net Income to Adjusted Income from Continuing Operations and Adjusted Consolidated EBITDA(1)(3) Year Ended December 31, (2) (In Millions, Except Per Share Data) 2008 Per Share Net income $ 281.8 $ 3.40 Income from discontinued operations, net of tax, attributable to H
Slide 25: First Quarter Reconciliation of Adjusted Consolidated EBITDA to Operating Cash
First Quarter Reconciliation of Adjusted Consolidated EBITDA(1) to Net Cash Provided by Operating Activities Three Months Ended March 31, 2009 2008 Adjusted Consolidated EBITDA $ 98.7 $ 89.2 Provision for doubtful accounts 7.9 7.8 Professional fees—accounting, tax, and legal (4.8) (3.6) Interest exp
Slide 26: Reconciliation Notes
Reconciliation Notes 1. Adjusted income from continuing operations and Adjusted Consolidated EBITDA are non-GAAP financial measures. Management and some members of the investment community utilize adjusted income from continuing operations as a financial measure and Adjusted Consolidated EBITDA as a