Diversicare Healthcare Services Inc
Diversicare Healthcare Services — Q4 2020 Earnings Presentation
31 slides from Diversicare Healthcare Services's earnings presentation, Mar 11, 2021
Slide 1: Investor Update As of December 31, 2020
OTCQX - DVCR Investor Update As of December 31, 2020
Slide 2: Forward-Looking Statements
OTCQX - DVCR Forward-looking statements made in this presentation involve a number of risks and uncertainties, but not limited to: Forward-Looking Statements 2 the outcome of proceedings alleging violations of state or Federal False Claims Acts our ability to increase census and occupancy rates
Slide 3: Forward-Looking Statements – COVID-19
OTCQX - DVCR as well as other risk factors detailed in the Company's Securities and Exchange Commission filings. The Company has provided additional information in its Annual Report on Form 10-K for the fiscal year ended December 31, 2020, as well as in other filings with the Securities and Exchange
Slide 4: Non-GAAP Information
OTCQX - DVCR Non-GAAP Information This presentation contains certain non-GAAP financial measures, including, EBITDA, Adjusted EBITDA and Adjusted EBITDAR. EBITDA is a non-GAAP financial measure which consists of net (loss) income before interest, income taxes, depreciation and amortization and loss
Slide 5: Investment Highlights
OTCQX - DVCR Leading Skilled Nursing Provider Compelling Demographic Trends Management’s Strategic Vision Yielding Results Demonstrated Ability To Grow And Enhance Portfolio Positively Trending Financial Results Investment Highlights 5
Slide 6: Company Overview
OTCQX - DVCR 6 Company Overview • Mature Company • Provides a full spectrum of post-acute healthcare services • Robust operating platform capable of significant growth expansion
Slide 7: Executive Leadership
OTCQX - DVCR • Re-joined Diversicare as COO in 2020 • 25+ years of experience in the LTC industry • Previous senior leadership positions at: ‒ Consulate Health Care Services ‒ Diversicare 2013 – 2016 • Occupational Therapist • Licensed Nursing Home Administrator Executive Leadership • CEO since 2018
Slide 8: Diversicare at a Glance
OTCQX - DVCR NE CO OK LA IA IL KS (6) OH (4)IN (1) MO (3) AR TN (5) PA MS (9) AL (20) SC NC GA VA WV TX (13) 8 Diversicare at a Glance 2020 Q4 Patient Revenues $119.5M – 2019 Q4 Patient Revenues $120.9M; Other Operating Income related to Federal Stimulus and State Grants $9.1M 2020 Q4 Q4 2020 Adjust
Slide 9: Company Profile
OTCQX - DVCR 9 Company Profile Publicly Traded Company since 1994 OTCQX Listed Company with symbol: DVCR 52 week trading range $0.75 – $4.25 Long Term Care provider Headquartered in Brentwood, TN
Slide 10: Platform Development and Operational Improvements
OTCQX - DVCR Implemented an Electronic Medical Record (EMR) and Related, Integrated Platform Solutions Centralized Key Processes People – Processes – Resources Aligned Improved Risk Profile Completed – Company repositioned for growth Platform Development and Operational Improvements 10
Slide 11: Long Term Care Industry Overview
OTCQX - DVCR 11 Long Term Care Industry Overview • Compelling Demographic Trends • Relative Low Cost of Care • Risks to the Industry and the Company
Slide 12: Compelling Industry Demographics
OTCQX - DVCR 12 Compelling Industry Demographics R is in g D e m a n d S ta b le S u p p ly Sources: AHCA, CMS OSCAR Data and US Census Bureau, US Administration on Aging 15,000 15,500 16,000 16,500 17,000 2000 2002 2004 2006 2008 2010 2012 2014 2016 Number of Skilled Nursing Facilities 0 20 40 60 8
Slide 13: Compelling Industry Demographics
OTCQX - DVCR 13 • Long term care spending continues to increase ‒ Medicare and Medicaid expenditures for SNFs expected to grow 57% from 2015 to 2025 ‒ Annual spending on older adults is expected to increase 250% by 2040 Sources: Medpac and US HHS Department Compelling Industry Demographics 20.0 30.0
Slide 14: Relative Cost Per Case of Treatment Across Post-Acute Care Providers
OTCQX - DVCR 14 Relative Cost Per Case of Treatment Across Post-Acute Care Providers Sources: Medpac and US HHS Department $0 $20 $40 $60 $80 $100 $120 Stroke Hip Fracture Joint Replacement Respiratory w/ Vent Tracheotomy w/ Vent $8 $9 $11 $6 $10 $26 $34 $18 $17 $26 $75 $31 $45 $67 $115 SNF IRF LTAC
Slide 15: Risks to the Industry and the Company
OTCQX - DVCR Risks to the Industry and the Company A number of risks may impact the Industry in general and the Company in particular, including litigation risks and Government reimbursement/regulation risks. Litigation Risks include: • The provision of health care services results in numerous profe
Slide 16: Risks to the Industry and the Company
OTCQX - DVCR Risks to the Industry and the Company Government Reimbursement Risks include: • In recent years, there have been initiatives on the federal and state levels for comprehensive reforms affecting the availability, payment and reimbursement of healthcare services in the United States. The I
Slide 17: Key Results and Outcomes
OTCQX - DVCR 17 Key Results and Outcomes • Improved Quality Measures • Improved patient mix and reimbursement rates • Improved operating and G&A leverage
Slide 18: Results for All Centers: Star Quality Measures Relative to Peer Group
OTCQX - DVCR Results for All Centers: 5 Star Quality Measures Relative to Peer Group 18 3.66 3.0 3.2 3.4 3.6 3.8 4.0 Overall QM Rating DVCR Industry For-Profit Not-For-Profit
Slide 19: Results: Rate Increases Driven By Higher Acuity
OTCQX - DVCR Results: Rate Increases Driven By Higher Acuity • Medicare rate growth driven by acuity • 29.3% Increase from FY10 Q3 to FY20 Q4 • 3.1% CAGR 19 $380 $400 $420 $440 $460 $480 $500 $520 Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11 Q4 '11 Q1 '12 Q2 '12 Q3 '12 Q4 '12 Q1 '13 Q2 '13 Q3 '13 Q4 '13 Q1 '1
Slide 20: Results: Rate Increases Driven By Higher Acuity
OTCQX - DVCR • Medicaid rates driven by acuity • 23.2% Increase from FY10 Q3 to FY20 Q4 • 2.5% CAGR Results: Rate Increases Driven By Higher Acuity 20 $145 $150 $155 $160 $165 $170 $175 $180 $185 Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11 Q4 '11 Q1 '12 Q2 '12 Q3 '12 Q4 '12 Q1 '13 Q2 '13 Q3 '13 Q4 '13 Q1 '14
Slide 21: Results: Impact Of New Centers
OTCQX - DVCR Acquisitions are Accretive to earnings within a short term from acquisition date – the exceptions being development opportunities like new construction, major renovations, etc. Demonstrated Platform Scalability by successful integration of new facilities New Facility Integration, includ
Slide 22: Results: Revenue Impact of Acquisitions
OTCQX - DVCR Results: Revenue Impact of Acquisitions 22 • The revenue presented above was restated to exclude Kentucky centers and only represents current operations. • For the purposes of this chart, the “Legacy Revenue” represents all centers acquired and operated by the Company prior to the Golde
Slide 23: Results: Revenue Growth and Operating Leverage
OTCQX - DVCR Results: Revenue Growth and Operating Leverage • Continued Company-wide cost reduction efforts in place o Diligent vendor management and product selection criteria o Centralized purchasing functions drive consistency through all facilities o Revenue and operating expenses increased in t
Slide 24: Results: G&A Leverage
OTCQX - DVCR • Continued G&A efficiency efforts in place o Right-sized overhead structure for changes in portfolio o Centralized core functions to leverage skilled teams • Savings from G&A reductions funded strategic investments Results: G&A Leverage 24 A – G&A expenses increased in the third quarte
Slide 25: Results: Key Financial and Operating Statistics
OTCQX - DVCR Results: Key Financial and Operating Statistics 25 Q4 2020 Q3 2020 Q2 2020 Q1 2020 Q4 2019 Average Daily Census 4,896 4,890 5,221 5,602 5,656 Total Average Daily Census – Medicare & Managed Care 905 807 784 769 748 Skilled Mix % 18.5% 16.5% 15.0% 13.7% 13.2% Occupancy (Available Beds) 7
Slide 26: Current Areas of Focus
OTCQX - DVCR 26 Current Areas of Focus • COVID-19 pandemic recovery • Enhancing existing portfolio • Portfolio management • Growth through accretive acquisitions • Right sizing of platform through dispositions
Slide 27: COVID-19 Pandemic & Response
OTCQX - DVCR • All centers have had COVID-19 cases in patients, residents, and team members • Patients served impact of ~13% decline from pre-pandemic levels is in line with nationwide industry experience • Federal and State support through stimulus and rate add-ons have provided critical support to
Slide 28: Continue to Enhance Existing Portfolio
OTCQX - DVCR Focus on patients served census / return to pre-pandemic levels Continuous improvement of Quality Measures Improve skilled mix / provide high-acuity services Ongoing renovations of existing facilities Addition of complementary services Continue to Enhance Existing Portfolio 28
Slide 29: Acquisition Types
OTCQX - DVCR • Full Ownership Of Assets • Participate In Value Appreciation • Enhance Facility Ownership Fee-Simple Acquisitions • Minimal Capital Required • Leverage Turnaround Capabilities • Leverage Strong REIT Relationships Assumption of Long-Term Operating Leases 2010 Today 20% 25% 80% 75% Flex
Slide 30: Summary
OTCQX - DVCR 30 Summary • Improved operational and financial results • Attractive investment dynamics • Repositioned for the future
Slide 31: Appendix
Appendix Net income (loss) Loss (income) from discontinued operations, net of tax Income tax provision (benefit) Interest expense Depreciation and amortization EBITDA EBITDA adjustments: Debt retirement costs Adjusted EBITDA Add: lease expense Adjusted EBITDAR HEALTHCARE SERVICES, INC. YDiversicare
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