Encompass Health Corporation · NYSE:EHC
Encompass Health — HealthSouth — Raymond James 38th Annual Institutional Investors Conference (March 2017)
16 slides from Encompass Health's conference presentation, Mar 6, 2017
Slide 1: Raymond James 38th Annual Institutional Investors Conference
Raymond James 38 Annual Institutional Investors Conference Orlando, FL| March 6, 2017 Doug Coltharp, Executive Vice President and Chief Financial Officer HEALTHSOU TH,
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 HealthSouth’s current outlook, views and plans with respect to future events, including legislative and regulatory developments, strate
Slide 3: HealthSouth: A Leading Provider of Post-Acute Care
HealthSouth: A Leading Provider of Post-Acute Care 59% of HealthSouth's IRFs are located within a 30-mile radius of an Encompass location. Encompass Inpatient Rehabilitation Home Health and Hospice Portfolio - As of December 31, 2016 Portfolio – As of December 31, 2016 IRF Market Share Inpatient Reh
Slide 4: Leading Position in Cost Effectiveness - IRFs
Leading Position in Cost Effectiveness(1) - IRFs Avg. Est. Avg. Est. Total Medicare pays Avg. Total Cost Payment Avg. Medicare Case per per HealthSouth less Beds Discharges Mix Discharge Discharge per discharge, per IRF per IRF(3) Index(4) for FY 2017 for FY 2017 on average, and HLS(2) = 119 68 956
Slide 5: Leading Position in Cost Effectiveness - Home Health
Leading Position in Cost Effectiveness - Home Health Encompass' average revenue per episode Average Effective is 12.4% higher due 2015 Revenue Visits Revenue Cost to higher acuity Episodes per Episode per Episode per Visit per Visit patient mix. Encompass 137,568 $3,072 19 $162 $72 Encompass' cost p
Slide 6: CMS: Driving Change Toward Integrated Delivery Payment Models, Value-Based Purchasing, and Site Neutrality
CMS: Driving Change Toward Integrated Delivery Payment Models, Value-Based Purchasing, and Site Neutrality >> 30% of Medicare fee-for-service payments via integrated delivery >> 50% of Medicare fee-for-service payment models (e.g., bundled payments via integrated delivery payments; accountable care
Slide 7: HealthSouth Well-Positioned for Progression Towards Site Neutrality
HealthSouth is Well-Positioned for the Progression Towards Site Neutrality as It Will be Able to Treat All Types of Post-Acute Patients by Leveraging Its Operational Expertise Across Its Network of Facility-Based and Home-Based Assets. HealthSouth’s rehabilitation hospitals have the physical constru
Slide 8: IRF-Home Health Clinical Collaboration (All Payors)
IRF-Home Health Clinical Collaboration (All Payors) Overlap Markets Clinical collaboration rate with HealthSouth IRFs increased by 730 basis points over Q4 2015 28.2% u Overlap markets are defined as a 20.9% Collaboration Rate Collaboration Rate HealthSouth IRF located within a 30- mile radius of an
Slide 9: Guidance
Guidance 2016 2017 Actuals Guidance Net Operating Revenues Net Operating Revenues $3,707.2 million $3,850 million to $3,950 million Adjusted EBITDA(6) Adjusted EBITDA(6) $793.6 million $800 million to $820 million Adjusted Earnings per Share Adjusted Earnings per Share from Continuing Operations fro
Slide 10: Guidance Considerations
Guidance Considerations Inpatient Rehabilitation Home Health and Hospice u Estimated 1.9% increase in Medicare u Estimated 3.6%, or ~$21 million, net pricing for Q1 through Q3; ~1.0% for Q4 Medicare pricing reduction for CY 2017 (see page 13) (see page 13) u Salary increase of ~3.0% u Salary increas
Slide 11: Adjusted Free Cash Flow and Tax Assumptions
Adjusted Free Cash Flow(8) and Tax Assumptions Certain Cash Flow Items 2015 2016 2017 (millions) Actuals Actuals Assumptions • Cash interest expense $128.6 $158.4 $150 to $160 (net of amortization of debt discounts and fees) • Cash payments for taxes, net of u Increased cash payments for $9.4 $31.9
Slide 12: Free Cash Flow Priorities
Free Cash Flow Priorities (In Millions) 2015 2016 2017 Highest Priority Actuals Actuals Assumptions IRF bed expansions $20.8 $19.1 $30 to $40 Growth New IRF’s in Core - De novos 47.8 72.6 85 to 105 Business - Acquisitions 786.2 — TBD - Replacement hospitals — 11.1 10 to 20 New home health and hospic
Slide 13: Business Outlook 2017 to 2019
Business Outlook 2017 to 2019* Business Model • Adjusted EBITDA CAGR: 5% - 9%** • Strong free cash flow generation 2017 2018 2019 • Quarterly cash dividends Shareholder • Opportunistic repurchases Distributions - (~$96 million authorization remaining as of December 31, 2016) Strategy Component • Tar
Slide 14: Business Outlook 2017 to 2019: Revenue Assumptions
Business Outlook 2017 to 2019: Revenue Assumptions Inpatient Rehabilitation Home Health & Hospice Volume (Includes New Stores) • 3+% annual discharge growth • 10+% annual episode growth • 10% to15% annual episode growth Approx. 73% of Revenue • Includes $35-$40 Approx. 83% ofmillion Revenueper Medic
Slide 15: End Notes
End Notes (1) Source: FY 2017 CMS Final Rule Rate Setting File and the last publicly available Medicare cost reports (FYE 2014/2015) or in the case of new IRFs, the June 2016 CMS Provider of Service File. a. All data provided was filtered and compiled from the Centers for Medicare and Medicaid Servi
Slide 16: End Notes
End Notes (8) Definition of adjusted free cash flow, which is a non-GAAP measure, is net cash provided by operating activities of continuing operations minus capital expenditures for maintenance, dividends paid on preferred stock, distributions to noncontrolling interests, and certain other items de
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