Select Medical Holdings Corporation · NYSE:SEM
Select Medical — Investor Presentation (May 2015)
35 slides from Select Medical's investor presentation, May 20, 2015
Slide 1: Investor Presentation May 2015
Investor Presentation May 2015
Slide 2: Forward-Looking Statements
Forward-Looking Statements 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
Slide 3: Select Medical Overview
Headquartered in Mechanicsburg, Pennsylvania, Select Medical employs approximately 31,900 staff in the United States. SCALE AND EXPERTISE Leading provider of post-acute services with operations in 42 states and D.C. Select Medical Overview Note: (1) See Slide 35 for non-GAAP reconciliation Founded i
Slide 4: Select Medical's National Footprint
11 2 7 1 3 6 1 14 3 2 3 17 2 1 1 4 24 2 15 2 15 2 20 10 7 93 6 1 2 2 3 19 66 4 3 13 1 11 5 45 33 17 3 16 11 1 57 9 51 2 131 148 1 9 2 44 4 1 3 152 23 1 1 21 2 2 1 21 33 1 42 3 2 4 2 5 5 12 15 2 6 1 24 16 1 2 2 5 3 1 98 53 9 1 Select Medical’s National Footprint 112 Long-Term Acute Care Hospitals (LT
Slide 5: Strategy
Strategy Be the “preferred” provider of post acute care services in our markets Structured relationships to align with patients Partner with academic/major medical institutions Hospital in hospital model in LTACH Experts in our fields – LTACH, Inpatient Rehab, Outpatient Rehab and Occupational Medic
Slide 6: 2014 Financial Highlights
2014 Financial Highlights 2014 FINANCIAL HIGHLIGHTS PRICING/ADMENDMENT TERM LOANS MARCH 2014 $110.0M SR. NOTE ADD-ON @ 101.5 MARCH 2014 SHARE PURCHASES DIVIDEND PAYMENTS 10M shares @ $10.95/share on March 13, 2014 ~1.3M shares @$14.00/share on May 21, 2014 $.10/share on March 10, 2014 $.10/share on
Slide 7: 2014 Development Highlights
2014 Development Highlights Rehabilitation Joint Ventures: LTACHs: 6 Start Ups 1 New Joint Venture Atlanta, GA 56 bed IRF 23 outpatient clinics Harrisburg, PA 55 bed IRF 21 outpatient clinics Cleveland, OH Two 60 bed IRFs (opening late 2015 & 2016) Cincinnati, OH 60 bed IRF (opening 2016) Atlanta, G
Slide 8: Long-Term Acute Care Specialty Hospitals
Long-Term Acute Care Specialty Hospitals
Slide 9: Select Medical LTAC Hospitals
Select Medical LTAC Hospitals 112 Long-Term Acute Care Hospitals (LTACH) (28 States) As of 03/31/15 3 3 2 1 1 2 2 2 10 2 3 3 11 5 16 9 1 1 1 3 2 5 2 6 1 5 1 9
Slide 10: LTACH Overview
LTACH Overview Major provider of LTACH services in U.S. 112 hospitals 82 hospital-in-hospital (3,091 beds); average size 38 beds 29 freestanding (1,601 beds); average size 55 beds 1 managed hospital Ownership of freestanding LTACHs 17 owned 12 leased
Slide 11: LTACH Legislation
LTACH Legislation LTACH Patient Criteria passed in late December 2013 as part of Budget bill and SGR - effective beginning Q4 2015 LTACH Rates for patients with; 3 day prior short term acute hospital ICU/CCU stay or Ventilation patients for > 96 hours in the LTACH Other patients receive “site neutra
Slide 12: Select Impact
Select Impact Positives: Degree of segment certainty with phase-in 25% Rule extension – through cost reporting periods on or after October 1, 2016 Select high CMI HiH Strategy Neutral: Moratorium – on new hospitals and beds (with exceptions) through September 30, 2017 Negatives: Potential loss of vo
Slide 13: Inpatient Rehabilitation Hospitals
Inpatient Rehabilitation Hospitals Inpatient Rehabilitation Specialty Hospitals
Slide 14: Inpatient Rehabilitation Hospitals: Kessler Institute
Acquired Kessler Institute in September 2003 The Kessler Rehabilitation network: Three freestanding inpatient rehab hospitals (336 total beds) 88 outpatient rehab clinics Largest licensed rehab hospital in U.S. U.S. News & World Report has recognized Kessler Institute as one of the nation’s best in
Slide 15: Operational Joint Ventures
Operational Joint Ventures Consolidated Joint Ventures: Non-Consolidating Joint Ventures: Dallas, TX 4 IRFs (220 beds) 2 managed units (33 beds) 50 outpatient clinics Scottsdale, AZ 50 bed IRF Columbus, OH 44 bed IRF Atlanta, GA 56 bed IRF 23 outpatient clinics Hershey, PA 76 bed IRF 22 bed TCU St.
Slide 16: JVs Under Construction
JVs Under Construction Cleveland, OH Two 60 bed IRFs (opening late 2015 & 2016) Currently managing 3 units with 97 total beds Los Angeles, CA 138 bed IRF (opening late 2015) Cincinnati, OH 60 bed IRF (opening 2016) Currently managing 2 units with 46 total beds
Slide 17: Growing Rehabilitation Network
Growing Rehabilitation Network Partner in joint ventures with premier acute care hospitals and systems to build post acute networks 18
Slide 18: Specialty Hospitals Poised for Growth
Specialty Hospitals Poised for Growth LTACH REHAB 2014 2015 2016 2 new LTACHs 1 new LTACH 3 new LTACHs 1 new LTACH 1 new LTACH Begin phase-in of LTACH patient criteria 6 New IRFs 8 New LTACHs
Slide 19: Outpatient Rehab Clinics
Outpatient Rehab Clinics Outpatient Rehabilitation
Slide 20: Outpatient Rehabilitation - Industry
Outpatient Rehabilitation - Industry 1,028 Outpatient Rehabilitation Clinics (31 States and D.C.) Source: Company public filings and websites as of March 31, 2015 Select (1,028) PhysioTherapy Associates (575) USPH (494) ATI (420) 11 7 6 14 2 17 24 15 20 93 1 66 13 45 17 57 9 44 152 1 21 2 21 33 42 1
Slide 21: Payor Mix Outpatient Rehab Clinics
Payor Mix Outpatient Rehab Clinics 42% 13% 22% 23% YEAR 2010 2011 2012 2013 2014 VISITS (000’s) REVENUE PER VISIT $101 4,567 $103 4,470 $103 4,569 $104 4,781 $103 4,971 LTM Q1 ‘15 $103 5,032 Medicare / Medicaid Commercial / Managed Care Workers’ Comp Managed/ Other
Slide 22: 2015 Outpatient Initiatives
Continued growth in workers’ comp business by illustrating historical ROI benefits of working with Select Payors/Employers Expand hand therapy services to more clinics Expand concussion management program Continued development of start-up clinics 2015 Outpatient Initiatives
Slide 23: Concentra Acquisition
Concentra Acquisition Concentra is the leading provider of occupational health with 488 locations across 40 states For the 12 months ended March 31, 2015, Concentra generated $1.0 billion of revenues and $96.0 million of Adjusted EBITDA Three primary service lines: Centers: 300 locations focused pri
Slide 24: Concentra Transaction Overview
Concentra Transaction Overview On March 23, 2015, Select Medical and Welsh Carson Anderson & Stowe (“WCAS”) announced the purchase of Concentra for $1,055 million. The transaction will be structured as a joint venture partnership Debt financing will be non-recourse to both Select and WCAS The transa
Slide 25: Concentra Investment Rationale
Concentra Investment Rationale Business well known by both WCAS and Select Complementary to Select’s outpatient rehabilitation business Significant geographic overlap of Concentra centers and Select outpatient clinics Select’s track record of successful acquisitions combined with WCAS’s historical k
Slide 26: Financial Overview
Financial Overview
Slide 27: Financial Metric Trends
Financial Metric Trends Net Revenue Adjusted EBITDA CAGR 6.3% CAGR 4.2% Adjusted EPS CAGR 17.1% $2,390 $2,805 $2,949 $2,976 $3,065 $307 $386 $406 $373 $364 ($ in millions) ($ in millions) $3,098 $366 $0.48 $0.84 $1.07 $ 0.90 $ 0.92 $0.94 2010 2011 2012 2013 2014 LTM Q1 2015 2010 2011 2012 2013 2014
Slide 28: Annual Capital Expenditures
($ in millions) Annual Capital Expenditures Accelerated development spending expected 2014-2015 $52 $46 $68 $74 $95 $0 $25 $50 $75 $100 2010 2011 2012 2013 2014 LTM Q1 '15 Maintenance Development $96
Slide 29: Focus on Free Cash Flow Generation
($ in millions) Note: Free Cash Flow calculated as Net Cash Provided by Operating Activities less Purchases of Property and Equipment See Slide 35 for non-GAAP reconciliation Free Cash Flow Focus on Free Cash Flow Generation $93 $171 $231 $119 $75 $128 2010 2011 2012 2013 2014 LTM Q1 '15
Slide 30: Debt Maturities
Debt Maturities ($ in millions) $280 $5 $568 $710 $0 $200 $400 $600 $800 2015 2016 2017 2018 2019 2020 2021 Revolver (L + 3.75%) Term Loan E (L + 2.75% - 1% floor) Term Loan D (L + 2.75%) Senior Notes 6.375%
Slide 31: Use of Capital - Opportunistic
Use of Capital - Opportunistic USE OF CAPITAL (OPPORTUNISTIC) STOCK BUYBACK DEBT REPAYMENT Acquisition payments $176M since 2010 $.10/share on December 1, 2014 DIVIDENDS ACQUISITIONS Investments in businesses $73M since 2011 Special dividend $1.50/share @ 12/2012 Dividend payments totaling $.30/shar
Slide 32: 2015 Financial Guidance
Net Revenue $3,100M - $3,200M Adjusted EBITDA $370M - $385M Adjusted EPS $0.84 - $0.90 2015 Financial Guidance
Slide 33: Appendix: Additional Materials
Appendix: Additional Materials
Slide 34: Non-GAAP Reconciliation
Non-GAAP Reconciliation ($ in millions) 2010 2011 2012 2013 2014 Q1 ‘14 Q1 ‘15 LTM Q1 ’15 Net Income $82 $113 $154 $123 $128 $35 $38 $131 (+) Income tax 42 71 90 75 76 22 23 77 (+/-) Equity in losses/(earnings) of unconsolidated subsidiaries 1 (3) (8) (2) (7) (1) (3) (9) (+/-) Other expense / (incom
Slide 35: selectmedical.com/investor-relations/for-investors
selectmedical.com/investor-relations/for-investors
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