Surgical Care Affiliates — Investor Presentation (June 2016)
25 slides from Surgical Care Affiliates's investor presentation, Jun 8, 2016
Slide 1: Surgical Care Affiliates June 8, 2016
Surgical Care Affiliates June 8, 2016 Exhibit 99.1
Slide 2: Forward-looking statements and non-GAAP disclaimer
This presentation contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995; particularly statements regarding future financial and operating results of the Company and its business. Statements contained herein that are not clearly historical in
Slide 3: Q1 2016 Highlights
Q1 earnings call highlights Systemwide net operating revenues increased 22% year over year Adjusted EBITDA-NCI increased 16% year over year Same-site systemwide net patient revenues increased 10% year over year (8% day adjusted) Eight new facilities added, total of 198 facilities as of May 3, 2016 C
Slide 4: Overview
Overview Largest independent surgical provider in the country; diversified growth strategy, partnering with health plans, medical groups & health systems Outstanding clinical care, patient satisfaction and physician satisfaction Clear value proposition to health plans, ACOs and risk bearing groups C
Slide 5: Patient Care & Physician Satisfaction
Patient Care & Physician Satisfaction 1 SCA Physician Satisfaction from survey in 2015. Net Promoter Industry Benchmarks, SatMetrix 2 SCA Patient Satisfaction as of March 31, 2016 Physician Net Promoter Score®1 91% patient satisfaction2 Accreditation by Joint Commission or Accreditation Association
Slide 6: Value of Ambulatory Surgery Center
Value of Ambulatory Surgery Center Ambulatory Surgery Centers (ASCs) Hospitals ~5,000 hospitals in the U.S. with ORs that may or may not be part of a separate outpatient department 1 Serve full spectrum of services both scheduled and emergent ~5,400 ASCs in the U.S. 2 Growing universe of procedures
Slide 7: Clinical Outcomes & Efficiency
Clinical Outcomes & Efficiency Peer reviewed journals have concluded that ASCs’ clinical quality is equal, or superior, to the hospital setting while being safer and more efficient 1 Even higher risk patients had fewer readmissions when treated in an ASC vs. a hospital 1 Elizabeth L. Munnich and Ste
Slide 8: Surgery = 30% of Total Spend
Surgery = 30% of Total Spend 1 Surgery 30% Medical/other 70% Hospital Outpatient 43% ASC 14% Hospital Inpatient 43% 1 SCA analysis of commercial health plan data. 2 http://www.ascassociation.org/AdvancingSurgicalCare. $500+ Billion Surgery Market à Significant Opportunity ~45% Discount Proportion of
Slide 9: Diversified Growth Strategy
Diversified Growth Strategy Health Systems Tie into integrated physician networks, ACOs, value-based payments 108 SCA facilities have a health system partner1 Example: MemorialCare, leading health system in CA with large IPA Health Plans Create clinical networks that reward quality and reduce cost I
Slide 10: Examples: Health System & Medical Group (1/2)
Examples: Health System & Medical Group (1/2) Partnership implications Leading health system in Orange County, CA $2 billion revenue 187K capitated lives 47K commercial ACO lives 44K health plan lives (Seaside) 600K medical group visits/year MemorialCare Monarch Largest IPA in Orange County, CA 2,50
Slide 11: Examples: Health System & Medical Group (2/2)
Examples: Health System & Medical Group (2/2) Partnership implications MemorialCare, Monarch and SCA have three-way joint venture for ASCs ASCs service MemorialCare capitated lives, ACO lives and health plan lives ASCs provide outstanding quality and cost savings Have grown partnership to nine facil
Slide 12: Example: Health System
Example: Health System Partnership implications 11 hospitals in Chicago One of the largest ACOs nationally 25% of business in capitation arrangements – looking to grow to 50% within 2 years 1,400+ employed physicians 5,300+ aligned physicians (IPAs, risk-bearing contracts) Incentivized around qualit
Slide 13: Example: Health Plan
Example: Health Plan Created a clinical network in collaboration with major Blue Cross plan Physicians are rewarded for patient experience and quality outcomes SCA facilities utilize evidence-based protocols to support outcomes SCA collaborates with Blue Cross to manage the network and program Partn
Slide 14: Example: Total Joints
Example: Total Joints Partnership implications Improvements in anesthesia and surgical techniques allow migration of total joints to ASC setting ASC setting increasingly being chosen by surgeons for their patients Total joint volumes have grown by double digits in 2015 over the prior year Background
Slide 15: Track Record of Growth
Track Record of Growth Adjusted EBTIDA-NCI ($M) 12% CAGR Adj. Net Income per Diluted Share Note: Please see appendix for reconciliation of historical non-GAAP financial measures to their corresponding GAAP financial measures. 36% CAGR 2015 impacted by higher interest expense due to the debt refinanc
Slide 16: History of Stable Organic Growth
History of Stable Organic Growth Establish right strategic partnerships (e.g., IPAs, medical groups) Launch new service lines – e.g., total joints, spine, cardiovascular Recruit physicians – over 200 new physicians added in last twelve months Optimize case mix – grow higher-acuity, higher revenue ca
Slide 17: Rapid Deleveraging Supported by Strong Cash Flow
Rapid Deleveraging Supported by Strong Cash Flow Adjusted Net Debt Leverage 1 Significant de-leveraging since 2010 Comfortable in 4.0x - 5.0x adjusted net debt leverage range Expect to redeploy capital at ~5-6x effective multiples going forward Maintain favorable liquidity profile – nearest maturity
Slide 18: 2016 Outlook
2016 Outlook Adjusted EBITDA-NCI ($M or growth %) 12% CAGR Highlights Note: Please see appendix for reconciliation of historical non-GAAP financial measures to their corresponding GAAP financial measures. 1 Reflects management’s estimate only and actual financial performance may differ from this est
Slide 19: Multiple levers for continued growth
Multiple levers for continued growth 1/3 1/3 1/3 Acquisitions/ development with existing partners New partnerships and selected acquisitions Optimize same-site performance Expanding service lines Attractive returns on in-market capital deployment Multiple partnerships in early stages of opportunity
Slide 20: Conclusion
Largest independent surgical provider in U.S. Outstanding quality and physician satisfaction Diversified growth strategy – strategic partnerships with leading health plans, medical groups and health systems Strong organic growth, including growth of new service lines – total joints, spine and cardio
Slide 21: Appendix
Appendix
Slide 22: Reconciliation of Net Income to Adjusted EBITDA-NCI
Reconciliation of Net Income to Adjusted EBITDA-NCI ($M) ¹ Amortization expense for definite-lived intangible assets attributable to equity method investments. These expenses are included in Equity in net income of nonconsolidated affiliates in our consolidated financial statements. 2 IPO related ex
Slide 23: Reconciliation of Adjusted EBITDA-NCI to Assumed Adjusted EBITDA-NCI
Reconciliation of Adjusted EBITDA-NCI to Assumed Adjusted EBITDA-NCI ($M) 1Represents an estimate of the EBITDA less NCI for acquisitions for the remaining portion of the applicable twelve-month period that follows the end of the fiscal year in which such acquisitions occurred. 2 SCA calculates Assu
Slide 24: Reconciliation of Net Income to Adjusted Net Income per Diluted Share
Reconciliation of Net Income (Loss) Attributable to SCA to Adjusted Net Income per Diluted Share ¹ Amortization expense for definite-lived intangible assets attributable to equity method investments. These expenses are included in Equity in net income of nonconsolidated affiliates in our consolidate
Slide 25: How the P&L works
How the P&L works Illustrative example
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