Encompass Health Corporation · NYSE:EHC
Encompass Health — HealthSouth — Investor Presentation (August 2011)
99 slides from Encompass Health's investor presentation, Aug 22, 2011
Slide 1: Investor Reference Book
Exhibit 99.1 Post Q2 2011 Earnings Release - Last updated August 22, 2011 INVESTOR REFERENCE BOOK (Reclassified for long-term acute care hospitals moving to discontinued operations)
Slide 2: Forward-Looking Statements
Exhibit 99.1 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 information are bas
Slide 3: Table of Contents
Exhibit 99.1 Table of Contents
Slide 4: Our Company
Exhibit 99.1 Inpatient Rehabilitation Hospitals (“IRFs”) Outpatient Rehabilitation Satellite Clinics Hospital-Based Home Health Agencies Employees Revenue in 2010 Inpatient Discharges in 2010 Outpatient Visits in 2010 26 + Puerto Rico Number of States Exchange (Symbol) Largest Owner and Operator of
Slide 5: Our Hospitals
Exhibit 99.1 Our Hospitals Major Services • Rehabilitation Physicians: manage and treat medical needs of patients • Rehabilitation Nurses: oversee treatment programs of patients • Physical Therapists: address physical function, mobility, safety • Occupational Therapists: promote independence and re-
Slide 6: Our Patients
Exhibit 99.1 Our Patients Most Common Conditions (Q2 2011) 1. Stroke 16.9% 2. Neurological 16.7% 3. Debility 11.4% 4. Fracture of the lower extremity 10.4% 5. Other orthopedic conditions 9.7% 6. Knee/Hip replacement 8.7% 7. Brain injury 7.5% 8. Cardiac conditions 4.4% 9. Spinal cord injury 3.7% 10.
Slide 7: Our Quality
Exhibit 99.1 Our Quality FIM Gain Change in Functional Independence Measurement (based on an 18 point assessment) from admission to discharge (1) Average = Expected, Risk-adjusted for UDS database • Inpatient rehabilitation hospitals evaluate all patients at admission and upon discharge to determine
Slide 8: Our Cost-Effectiveness
Exhibit 99.1 HealthSouth differentiates itself by providing superior quality care at a lower cost. (1) The 96 for HLS does not include HealthSouth Sugar Land Rehabilitation Hospital, purchased in September 2010; it was included in the 136 non-HLS freestanding. (2) In 2010, HealthSouth averaged 1,197
Slide 9: CMS Fiscal Year 2012 IRF Rate Setting File Analysis
Exhibit 99.1 CMS Fiscal Year 2012 IRF Rate Setting File Analysis Notes: (1) All data provided was filtered and compiled from the Centers for Medicare and Medicaid Services (CMS) Fiscal Year 2012 IRF rate setting Final Rule file found at http://www.cms.gov/InpatientRehabFacPPS/07_DataFiles.asp#. The
Slide 10: Our Payors (Q2 2011)
Exhibit 99.1 Payment Methodology Payor Source 72.0% 19.8% 2.0 % 4.4% Our Payors (Q2 2011) Prospective Payment System (“PPS”) • Payments based on Case Mix Groups (“CMGs”) – Diagnosis of patient’s illness • Fixed payment per CMG adjusted for: – Acuity/severity – Regional wage differential • Per diems
Slide 11: Volume growth vs. industry
Exhibit 99.1 4.7% 5.9% 5.9% 5.8% 5.9% 2.7% 2.5% 1.3% (1) Data provided by UDSMR, a data gathering and analysis organization for the rehabilitation industry; represents ~ 65-70% of industry, including HealthSouth sites. (2) Includes consolidated HealthSouth inpatient rehabilitation hospitals classifi
Slide 12: Our Track Record
Exhibit 99.1 Our Track Record ($ in millions) (1) Reconciliation to GAAP provided on slides 50 and 92 - 97. (2) 2010 and Trailing 4Qtrs both include a tax benefit of ~$825 million for the reversal of a substantial portion of the valuation allowance against deferred tax assets.
Slide 13: Our Track Record: Leverage Ratio and Interest Expense
Exhibit 99.1 Our Track Record Leverage Ratio (1) (billions) (1) Reconciliation to GAAP provided on slides 49, 50, and 92 - 97. Interest Expense $229 $135
Slide 14: Successfully managed through Medicare payment cuts and recession
Exhibit 99.1 HealthSouth has successfully managed through Medicare payment cuts and an economic recession… Adjusted EBITDA ($million) Discharges
Slide 15: Our Assets
Exhibit 99.1 3,154 Licensed Beds in CON States Our Assets 97 (1) Inpatient Rehabilitation Hospitals, 6,356 Licensed Beds 3,202 Licensed Beds in Non-CON States 24 Own Hospital Building Only 38 Own Building and Land 35 Lease Building and Land A Certificate of Need (CON) is a legal document required in
Slide 16: Strong and Sustainable Business Fundamentals
Exhibit 99.1 Growth Opportunities Financial Strengths Industry Leading Position Attractive Healthcare Sector Cost-Effectiveness Real Estate Portfolio Strong and Sustainable Business Fundamentals (1) Inclusive of non-consolidated entities
Slide 17: Industry Structure
Exhibit 99.1 Industry Structure
Slide 18: National Healthcare Spending
Exhibit 99.1 $759.1 $137.0 $674.9 $122.6 $68.3 $328.0 $29.8 $133.2 $77.2 $156.2 National Healthcare Spending: $2,486.3 billion Sources : Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group, MedPAC. Data for the year ended December 31, 2009. Overall Healt
Slide 19: Medicare 2010 Spending
Exhibit 99.1 5% 27% 23% 12% 12% 4% 5% 12% Medicare Part B Medicare Part C Medicare Parts A&B Medicare Part D Medicare Part A Medicare 2010 Spending = $509.7 Billion (1) (1) Percentages are based upon total Medicare spending of $520.3 billion, before $10.6 billion of recoveries for 2010 (CBO Medicare
Slide 20: Continuum of Healthcare Services
Exhibit 99.1 Preventive Routine health care that includes screenings, check-ups, and patient counseling to prevent illnesses, disease, or other health problems. Acute Medical treatment of diseases for which a patient is treated for a brief but severe episode of illness. Ambulatory Medical care deliv
Slide 21: Medicare Trustee's Report
Exhibit 99.1 Note: These numbers are program spending only and do not include beneficiary copayments. Source : Centers for Medicare and Medicaid Services, Office of the Actuary (MedPAC June 2011 Data Book - Page 122), March 2011 Medicare Trustee s Report Skilled nursing facilities 18.1% Home health
Slide 22: Geographic Distribution of IRFs, 2009
Exhibit 99.1 Geographic Distribution of IRFs, 2009 Map source: MedPAC analysis of 2009 Provider of Service files from CMS Report to the Congress: Medicare Payment Policy, March 2011, page 205, http://www.medpac.gov/chapters/Mar11_Ch09.pdf
Slide 23: Supply of IRFs remains stable in 2009
Exhibit 99.1 Supply of IRFs remains stable in 2009 MedPAC analysis of 2009 Provider of Service files from CMS Inpatient rehabilitation facility services: Assessing payment adequacy and updating payments, page 208, http://www.medpac.gov/chapters/Mar11_Ch09.pdf
Slide 24: Inpatient Rehabilitation Sector
Exhibit 99.1 (1) The 96 for HLS does not include HealthSouth Sugar Land Rehabilitation Hospital, purchased in September 2010; it was included in the 136 non-HLS freestanding. (2) In 2010, HealthSouth averaged 1,197 total Medicare and non-Medicare discharges per hospital in its 94 consolidated hospit
Slide 25: Readmission Rates
Exhibit 99.1 Readmission Rates Note: Use of home health care and hospice is based on care that starts within three days of discharge. Other PAC care starts within one day of discharge. Home health use includes episodes that overlap an inpatient stay. Source : Medicare Payment Advisory Commission, “A
Slide 26: CMS: Inpatient Rehabilitation vs. Skilled Nursing
Exhibit 99.1 CMS: Inpatient Rehabilitation vs. Skilled Nursing … MedPAC’s analysis of recent quality measure data related to rehospitalizations suggests that quality of care within SNFs has not been improving … Since 2000, one outcome measure (the risk-adjusted rate of rehospitalization for any of f
Slide 27: Future Regulatory Risk
Exhibit 99.1 Future Regulatory Risk Inpatient Rehabilitation Facility Skilled Nursing Facility Long-Term Acute Care Hospital Home Health Hospice 1. Re-basing payment system No Yes; RUGS IV and MDS 3.0 parity adjustment for FY 2012 (-12.6%) No Yes; proposed re-weighting re- distributes payment from h
Slide 28: Estimated Impact of Budget Control Act
Exhibit 99.1 Estimated Impact to HealthSouth Scenario Comments Above estimates assume no mitigating actions by HealthSouth Our assessment of potential Medicare reductions emanating from the Budget Control Act 1) Special Committee actions mirror President’s Fiscal Commission (Simpson Bowles) (million
Slide 29: Historical Perspective
Exhibit 99.1 Historical Perspective
Slide 30: Historical Perspective
Exhibit 99.1 Historical Perspective • Used proceeds plus tax refund to repay $1.4 billion of debt • Reduced G&A to match residual business size • Piloted TeamWorks sales and marketing • 75% rule frozen at 60% (MMSEA) • Completed all settlement payments (1) Reconciliation to GAAP provided on slides 5
Slide 31: Historical Perspective: 2008
Exhibit 99.1 2008 Adjusted EBITDA (1) = $322.6 Historical Perspective • Established 2008-2010 business model • 4% discharge growth; 5-8% Adjusted EBITDA growth;15-20% adjusted EPS growth • Balanced delevering and growth/development strategies • Completed TeamWorks sales and marketing roll-out • Abso
Slide 32: Historical Perspective: 2009
Exhibit 99.1 2009 Adjusted EBITDA (1) = $363.7 2008 Adjusted EBITDA (1) = $322.6 Historical Perspective • Continued focus on delevering (~ $151 million repaid) • Focused on organic growth; TeamWorks sustainability module rolled out • Issued 5 million shares for securities litigation settlement (Q3)
Slide 33: Historical Perspective: 2010
Exhibit 99.1 2010 Adjusted EBITDA (1) = $409.6 2009 Adjusted EBITDA (1) = $363.7 2008 Adjusted EBITDA (1) = $322.6 Historical Perspective • Healthcare reform passed; reduced future market basket updates • Weak acute care referral volumes • Adjusted annual volume growth target to 2.5-3.5% • Developme
Slide 34: Historical Perspective: 2011
Exhibit 99.1 2010 Adjusted EBITDA (1) = $409.6 2009 Adjusted EBITDA (1) = $363.7 2008 Adjusted EBITDA (1) = $322.6 Historical Perspective • Acute care volumes still low • Annual volume growth target remains 2.5-3.5% • Completed public offering of $122 million by reopening 2018 and 2022 senior notes.
Slide 35: Revenues & Expenses
Exhibit 99.1 Revenues & Expenses (1) Employees per occupied bed, or “EPOB,” is calculated by dividing the number of full-time equivalents, including an estimate of full- time equivalents from the utilization of contract labor, by the number of occupied beds during each period. The number of occupied
Slide 36: Adjusted EBITDA
Exhibit 99.1 Adjusted EBITDA (1) (1) Reconciliation to GAAP provided on slides 50 and 92 - 97.
Slide 37: Share count notes
Exhibit 99.1 Notes : (1) Does not include 2.0 million warrants issued in connection with a January 2004 loan repaid to Credit Suisse First Boston. In connection with this transaction, we issued warrants to the lender to purchase two million shares of our common stock. Each warrant has a term of ten
Slide 38: Business Outlook 2011 to 2013
Exhibit 99.1 Business Outlook 2011 to 2013 (as of August 22, 2011)
Slide 39: Strategy and Business Model
Exhibit 99.1 Business Model • Adjusted EBITDA CAGR: 5-8% (1) • Adjusted Free Cash Flow CAGR: 12-17% (1) Delevering (2) Achieved 3.5x debt to EBITDA Longer-Term Goal: ~ 3.0x debt to EBITDA Growth Same-store growth (Includes capacity expansions and unit consolidations) De novos (minimum of 4/year) IRF
Slide 40: Business Outlook: Revenue Assumptions
Exhibit 99.1 Volume • 2.5% to 3.5% annual growth (excludes acquisitions) • Includes bed expansions, de novos and unit consolidations Medicare Managed Care Business Outlook: Revenue Assumptions Revenue Other (1) Not inclusive of the Budget Control Act of 2011, which could result in a reduction of up
Slide 41: Business Outlook: Expense Assumptions
Exhibit 99.1 Salaries & Benefits (1) Hospital Expenses • Other operating and supplies tracking with inflation Salaries & Benefits Hospital Expenses Business Outlook: Expense Assumptions Expense 4.5% of revenue (excludes stock-based compensation) (1) Salaries, Wages and Benefits: 85% Salaries and Wag
Slide 42: Guidance
Exhibit 99.1 Guidance
Slide 43: 2011 Guidance - Adjusted EBITDA
Exhibit 99.1 Original Guidance Feb. 17, 2011 $440 million to $450 million ( Inclusive of 12 months LTCH Adjusted EBITDA) Updated July 27, 2011 $447 million to $453 million ( exclusive of any LTCH Adjusted EBITDA) Revised Guidance May 18, 2011 $440 million to $450 million; (The high end of, or greate
Slide 44: 2011 Guidance - EPS
Exhibit 99.1 Basic Earnings per Share from Continuing Operations Attributable to HealthSouth (1) $1.17 to $1.22 Diluted earnings per share on a GAAP basis are the same as basic earnings per share due to the antidilutive impact in the period. 2011 Guidance - EPS (as of August 22, 2011) Considerations
Slide 45: 2011 Guidance - EPS
Exhibit 99.1 2011 Guidance - EPS (as of August 22, 2011) (2) Income from continuing operations attributable to HealthSouth (reclassified for the 6 LTCHs moving to discontinued operations) (3) Current period amounts in income tax provision; see slides 98 - 99. (4) Total income tax provision for full-
Slide 46: Adjusted Free Cash Flow Considerations
Exhibit 99.1 HealthSouth’s GAAP income statement will be affected by a number of items that will not affect adjusted free cash flow: Normalized GAAP tax rate resulting from the valuation allowance reversal in Q4 2010. Loss on early extinguishment of debt Business Model Multi-Year Adjusted Free Cash
Slide 47: Income Tax Considerations
Exhibit 99.1 GAAP Considerations: • As of 6/30/11, the Company had an ending balance of approx. $1.4 billion in federal NOLs and a remaining valuation allowance of approx. $106 million, primarily related to state NOLs. • Expect effective tax rate of approx. 40% going forward Future Cash Tax Payments
Slide 48: Free Cash Flow
Exhibit 99.1 Free Cash Flow
Slide 49: Adjusted Free Cash Flow
Exhibit 99.1 Adjusted Free Cash Flow (1) Maintenance capital expenditures are expected to be $60 million in 2011 and $75 million in 2012. (2) Final swap payment of $10.9 million was made in March 2011.
Slide 50: Net Cash Provided by Operating Activities
Exhibit 99.1 Net Cash Provided by Operating Activities
Slide 51: Priorities for Reinvesting Free Cash Flow
Exhibit 99.1 Business Model: Adjusted free cash flow CAGR: 12-17% (1) HealthSouth’s priorities for reinvesting free cash flow… • Additional debt prepayment (revolver, term loan and senior notes) • Growth in core business • Bed expansions • De novo hospitals • Hospital acquisitions • Acute care IRF u
Slide 52: Refinancing and Delevering
Exhibit 99.1 Refinancing and Delevering
Slide 53: Debt Schedule as of June 30, 2011
Exhibit 99.1 Debt Schedule as of June 30, 2011 (1) On September 1, 2011 we will call the remaining 10.75% senior notes. (2) Based on 4-quarter trailing and 2010 Adjusted EBITDA of $440.8 million and $409.6 million, respectively; reconciliation to GAAP provided on slides 50, 92, 93, and 97.
Slide 54: Debt, Liquidity, and Swaps
Exhibit 99.1 (1) Based on 2008 and trailing 4-quarter Adjusted EBITDA of $322.6 million and $440.8 million, respectively; reconciliation to GAAP provided on slides 50 and 92 - 97. Debt, Liquidity, and Swaps Liquidity Credit Ratings
Slide 55: Lower-cost, flexible capital structure
Exhibit 99.1 10% of the principal is callable each year at $103 (2) Does not include $387.4 million of convertible perpetual preferred stock and capital leases and other note payables. HealthSouth is now positioned with a lower-cost, flexible capital structure… $500 Revolver L+250 § Adequate undrawn
Slide 56: Use of Revolver
Exhibit 99.1 Refinancing capacity within the revolver is limited by liquidity considerations. Use of Revolver • Liquidity should be sufficient to address: – The accelerated de novo plan – Short-term disruptions to the financial system – Short-term disruptions to our business – Unforeseen cash requir
Slide 57: Credit Agreement Key Covenants
Exhibit 99.1 Terms Acquisitions Limited by compliance with leverage and interest coverage covenants initially established at 5.0x and 2.5x, respectively Restricted payments: 10.75% repurchase Unlimited up to 4.5x leverage ratio (revolver draws available for repurchase) Share repurchase (2) $200 mill
Slide 58: Growth
Exhibit 99.1 Growth
Slide 59: Organic Growth: A Strategic Framework
Exhibit 99.1 Demographics + population growth and changes (weighted by age) = Rehab CAGR Growth goals for the market and/or hospital Sales and Marketing Strategies Defining “upstream” opportunities Identifying CMS-13 discharges “Converting” CMS-13 patients to rehab Market Dynamics Existing IRF beds
Slide 60: Organic Growth: Compounded Annual Growth Rate
Exhibit 99.1 Organic Growth: Compounded Annual Growth Rate (CAGR) (1) (1) Numbers in map are for illustrative purposes only and do not represent actual results. (2) “Weighted for Rehab Services” - methodology weights growth in rehab age groups higher. % CAGR Rehab by Zip Code Weighted for Rehab Serv
Slide 61: De Novo Market Selection Process
Exhibit 99.1 Active Development List Corporate Assessment Strategic Approach • Build • Buy • JV Regional President Priority Assessment “Deep Dive” Market Assessments Potential Opportunity List (160 opportunities identified) National Market Assessment ( 3,141 counties in 48 states studied) De Novo Ma
Slide 62: De Novo Evaluation Process
Exhibit 99.1 CON Approval Site Selection Cost Assessment Pro forma Financials Execution NO GO GO Market Selection GO NO GO • Design • Construction De Novo Evaluation Process
Slide 63: Illustrative De Novo Timeline
Exhibit 99.1 Illustrative De Novo Timeline Day 1 CON Process Construction With CON Design Planning & Zoning Month 20 Groundbreaking Month 32 Opening Construction Design Planning & Zoning Month 11 Groundbreaking Month 20 Opening Day 1 Without CON
Slide 64: Illustrative De Novo Pro forma (40 bed)
Exhibit 99.1 Capital Cost $ Range (millions) Low High Construction, design, permitting, etc. $11.0 $14.5 Land 1.5 3.5 Equipment 2.5 3.0 $15.0 $21.0 Pre-opening Expenses (thousands) Low High Operating $200 $300 Salaries, wages and benefits 150 200 $350 $500 Illustrative De Novo Pro forma (40 bed)
Slide 65: Hospital EBITDA and Occupancy
Exhibit 99.1 (1) Hospital EBITDA = earnings before interest, taxes, depreciation and amortization directly attributable to the related hospital. Occupancy
Slide 66: IRF Acquisition Performance
Exhibit 99.1 Date Acquired Acquired Census Q2 2011 Census Vineland Q3 2008 26 35 Desert Canyon Q2 2010 16 35 Sugar Land Q3 2010 26 35 Ft. Smith Q3 2010 15 34 IRF Acquisition Performance Value added by HealthSouth • TeamWorks approach to sales/marketing • Labor management tools and “best practices” •
Slide 67: Portfolio Growth: Cash Payback
Exhibit 99.1 Cash Payback Cash Payback • Target: Minimum of 4 de novos and 2 - 3 acquisitions/yr • All projects have minimum IRR of 15%. • Longer payback on de novos versus acquisitions is attributable to: • 12-15 month construction period • Initial ramp-up of operations on de novos Portfolio Growth
Slide 68: Future Growth: Complementary Post-Acute Care Services
Exhibit 99.1 Discharge Hospice Inpatient Rehabilitation Facility (1) Skilled Nursing Facility Home Health (1) (Lowest Acuity) Acute Care Hospital (Highest Acuity) Future Growth: Complementary Post-Acute Care Services Source: MedPac and CMS (1) For information on HealthSouth’s hospital portfolio, see
Slide 69: Growth: Summary
Exhibit 99.1 • Growth strategies will complement delevering priority. - “Highest and best use” of FCF will determine where to invest. • The Company continues to have excellent organic growth opportunities. - Locations in above-average “Rehab CAGR” markets - Non-discretionary nature of many condition
Slide 70: Operational Initiatives
Exhibit 99.1 Operational Initiatives
Slide 71: Key Operational Initiatives: Summary
Exhibit 99.1 Key Operational Initiatives: Summary • Strong track record of providing high-quality, cost-effective care – Functional gains exceed industry norms – Consistent market share gains – Disciplined expense management • Targeted operational strategies to achieve excellence in: – Clinical care
Slide 72: Operational Strategy
Exhibit 99.1 Operational Strategy Excellence in … • Care Management TeamWorks project • Identify trends and establish “best practices” for the prevention of acute care transfers • Provide a robust rehabilitation specific clinical education program for nurses and therapists • BEACON management report
Slide 73: TeamWorks: Care Management
Exhibit 99.1 Design a HealthSouth Care Management Playbook to be implemented across all hospitals Referral Management Pre-authorization / Pre- certification Patient Assessment Care Delivery & Documentation Interdisciplinary Team Process Denials & Approvals Outcomes Analysis Effective & Efficient Car
Slide 74: TeamWorks: Care Management Project Overview
Exhibit 99.1 Pilot Process Finalize Training Modules Implement Current State Assessment Future State Vision Design Process October - November 2010 Test the application of the newly designed Playbook, tools, processes and forms. Gather feedback and improve the process for the 2011 implementation. Dec
Slide 75: CPR: Comfort, Professionalism, Respect
Exhibit 99.1 CPR is an in-house course designed to train all employees to realize that even minor encounters between staff and patients can have a memorable impact on the patient’s entire experience. CPR: Comfort, Professionalism, Respect • All employees trained in the CPR campaign. • Hospital-based
Slide 76: BEACON
BEACON HEALTHSOUTH MANAGEMENT REPORTING
Slide 77: BEACON: Hospital-Specific
Exhibit 99.1 BEACON: Hospital-Specific (1) (1) Numbers in screen shot have been modified for presentation and do not represent actual results.
Slide 78: BEACON: Regional Roll-up
Exhibit 99.1 BEACON: Regional Roll-up (1) (1) Numbers in screen shot have been modified for presentation and do not represent actual results.
Slide 79: Clinical Information Systems in Healthcare
Exhibit 99.1 CIS adoption is not solely responsible for these results, AND … adoption of CIS in healthcare is very slow! Clinical Information Systems in Healthcare • Clinical information systems (CIS) are a key component of successful quality, safety and patient satisfaction initiatives in healthcar
Slide 80: EMR Adoption Model Trends
Exhibit 99.1 Stage 2 Clinical Data Repository, Controlled Medical Vocabulary, may have Document Imaging; Health Info Exchange capable Stage 3 Digital Radiology Stage 4 Computerized Physician Order Enter, Clinical Decision Support (clinical protocols) Stage 5 Closed loop medication administration, 5
Slide 81: EMR Adoption Model
Exhibit 99.1 EMR Adoption Model • Most U.S. hospitals are at Stage 3 (Foundation Stage) or below. • Stages 0, 1 and 2 are slowing. • Stage 3 is growing the fastest. – 10% in 2005 - 50.9% in 2009 • Advanced Stages 3 through 7: – Require only one service or unit to be implemented – Reduce medical erro
Slide 82: HealthSouth Clinical Information Technology
Exhibit 99.1 HealthSouth Clinical Information Technology Current State
Slide 83: Vendor Selection Process
Exhibit 99.1 2005 Request for Proposal 2007 Project on hold 2009 Cerner final selection July 2009 Core team assembled Vendor Selection Process 13 vendors responded; 3 finalists Due to business unit divestitures Why Cerner? • Inpatient rehabilitation-specific application • Integrated solution meeting
Slide 84: Clinical information system capabilities
SSS SSS SSS SSS Focused online documentation (physician, nursing, therapy) Real-time patient condition awareness (medical and functional) from any team member support device Clinical data repository (reporting and outcomes) Electronic Medical Record Medication administration system with point of car
Slide 85: Implementation: Cerner Project Timeline
Exhibit 99.1 Implementation: Signed contract with Cerner for Company- wide implementation starting in 2012 (1) . Project Timeline Project On Hold (Divestitures) Clinical Visioning Cerner Selected Feb 2009 Vendor Evaluations Project Restart & Vendor Re-evaluations Pilot Contract Negotiation Jun 2009
Slide 86: Operational Metrics
Exhibit 99.1 Operational Metrics
Slide 87: Volume growth vs. competitors
Exhibit 99.1 4.7% 5.9% 5.9% 5.8% 5.9% 2.7% 2.5% 1.3% (1) Data provided by UDSMR, a data gathering and analysis organization for the rehabilitation industry; represents ~ 65-70% of industry, including HealthSouth sites. (2) Includes consolidated HealthSouth inpatient rehabilitation hospitals classifi
Slide 88: Operational Metrics: Expense Efficiencies
Exhibit 99.1 3.59 3.52 3.49 3.43 EPOB Operational Metrics: Expense Efficiencies (% of Net Operating Revenues) 2008 2009 2010 2011 2008 2009 2010 2011 2008 2009 2010 2011 (6 Months) (6 Months) (6 Months) • Salaries, Wages & Benefits reflects continued improvement from productivity gains and growing r
Slide 89: Operating statistics
Exhibit 99.1 (1) Numbers have been reclassified to reflect current continuing operations. (2) Represents discharges from HealthSouth’s 94 consolidated hospitals in Q2 2011, Q1 2011, Q4 2010 and Q3 2010, 92 consolidated hospitals in Q2 2010, and 90 consolidated hospitals in Q1 2010 and Q4 2009, 91 co
Slide 90: Payment Sources (Percent of Revenue)
Exhibit 99.1 Payment Sources (Percent of Revenue) (1 ) Managed Medicare revenues represent ~ 7%, 8%, 7%, 8% and 8% of total revenues for Q2 2011, Q2 2010, 6 Months 2011, 6 Months 2010 and Full Year 2010, respectively, and are included in “Managed care and other discount plans.”
Slide 91: Reconciliations to GAAP
Exhibit 99.1 Reconciliations to GAAP
Slide 92: Reconciliation of Net Income to Adjusted EBITDA
Exhibit 99.1 Reconciliation of Net Income to Adjusted EBITDA (1)(3) (1) (2) (3) - Notes on page 97.
Slide 93: Reconciliation of Net Income to Adjusted EBITDA
Exhibit 99.1 Reconciliation of Net Income to Adjusted EBITDA (1)(3) (1) (2) (3) - Notes on page 97.
Slide 94: Reconciliation of Net Income to Adjusted EBITDA
Exhibit 99.1 Reconciliation of Net Income to Adjusted EBITDA (1) (3) (1) (2) (3) - Notes on page 97.
Slide 95: Reconciliation of Net Income to Adjusted EBITDA
Exhibit 99.1 Reconciliation of Net Income to Adjusted EBITDA (1) (3) (1) (2) (3) - Notes on page 97.
Slide 96: Reconciliation of Net Income to Adjusted EBITDA
Exhibit 99.1 Reconciliation of Net Income to Adjusted EBITDA (1) (3) (1) (2) (3) - Notes on page 97.
Slide 97: Reconciliation Notes for Slides 92-96
Exhibit 99.1 Reconciliation Notes for Slides 92-96 1. Adjusted EBITDA is a non-GAAP financial measure. The Company’s leverage ratio (total consolidated debt to Adjusted EBITDA for the trailing four quarters) is, likewise, a non- GAAP financial measure. Management and some members of the investment c
Slide 98: (1) (2) (3) (4) - Notes on page 99.
Exhibit 99.1 (1) (2) (3) (4) - Notes on page 99.
Slide 99: Reconciliation Notes
Exhibit 99.1 Reconciliation Notes for Slide 98 1. Adjusted income from continuing operations and Adjusted EBITDA are non-GAAP financial measures. The Company’s leverage ratio (total consolidated debt to Adjusted EBITDA for the trailing four quarters) is, likewise, a non-GAAP financial measure. Manag