Select Medical Holdings Corporation · NYSE:SEM
Select Medical — J.P. Morgan Healthcare Conference 2012
33 slides from Select Medical's conference presentation, Jan 9, 2012
Slide 1: J.P. Morgan Healthcare Conference January 9, 2012
J.P. Morgan Healthcare Conference January 9, 2012
Slide 2: 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 cause results to differ mat
Slide 3: Select Medical Today
110 LTAC Hospitals 109 owned with 4,627 beds and 1 managed. Hospitals is 28 states. 952 Outpatient Rehab Clinics in 34 states and the District of Columbia. $2.7 Billion Net Revenue LTM Q3 '11$358 Million Pro Forma Adjusted EBITDA LTM Q3 '11128,500 Employees in the United States 9 Inpatient Rehab Fac
Slide 4: Significant Scale and Breadth
Significant Scale and Breadth
Slide 5: 2011 Activities
2011 Activities $150 million Share Buyback Program Increased from $100 million in August 2011June 1, 2011 - Debt RefinancingBaylor Health System Rehab Joint Venture - April 1, 2011Miami Rehab addition - January 1, 2011Regency Integration
Slide 6: Operating and Growth Strategy
Operating and Growth Strategy Organic Joint Venture Acquisition LTAC - maturing hospitals/census growthRegency - margin improvementOutpatient Rehab - margin improvement HealthSouth Clinics Draw on reputation for JV developmentExpand into existing and contiguous marketsFocus on leading systems and un
Slide 7: Balanced Payor Mix
Balanced Payor Mix Specialty Payor Mix Outpatient Payor Mix Overall Payor Mix 89% Commercial Payors and Other 11%Medicare/ Medicaid 66%Medicare/Medicaid 34%Commercial Payors and Other Note: LTM Q3'11
Slide 8: Specialty Hospitals Long Term Acute Care
Specialty Hospitals Long Term Acute Care
Slide 9: LTACH Overview
Major provider of LTACH services in U.S. 110 hospitals79 are hospital-in-hospital (2,720 beds)30 are freestanding (1,907 beds)1 managed freestanding hospital New Hospitals Added 2008-09 ? 10 LTACs and 2 Rehab Adjusted EBITDA 2008 ($25.0)MAdjusted EBITDA 2009 ($ 1.6)MAdjusted EBITDA 2010 $ 8.3 MAdjus
Slide 10: Regency Acquisition
On September 1, 2010, Select closed the acquisition of Regency Hospitals for $210M less assumed liabilities23 long-term acute care hospitals with 898 licensed beds in 9 statesCorporate services and back office functions fully integratedSynergies and margin enhancementCorporate CostsPre-Acquisition -
Slide 11: LTACH Regulatory Environment
MMSEA 2007 - extended through December 2012Hospital in Hospital Rules - suspended at 50%Very Short Stay Outlier Rule - suspendedMoratorium on new LTAC hospital licensesFuture - post-2012Patient/Facility Criteria (Supported by Industry, AHA, FAH, etc.)Extension of 2012 legislation (status quo)Lapse (
Slide 12: Specialty Hospitals Inpatient Rehabilitation
Specialty Hospitals Inpatient Rehabilitation
Slide 13: Rehabilitation Hospitals
Six owned hospitals - 508 bedsKessler Institute (3)Miami FL (1)Penn State Hershey Rehabilitation (1)SSM Rehabilitation (1), and one managed unitThree managed hospitalsBaylor (2) - non-consolidated, and three managed unitsDenton, TX (1) - non-consolidated Rehabilitation Hospitals
Slide 14: Kessler Overview
Rehabilitation Overview Founded in 1948Largest licensed rehab hospital in U.S. (three campuses)19 consecutive years U.S. News & World Report best hospitalOne of six rehab hospitals in U.S. to have model system designation for head injury and spinal cord injury #1 Rehabilitation Institute of Chicago,
Slide 15: Rehab JV Overview
Rehab JV Overview 78 inpatient rehab beds (58 hospital beds and 20 bed unit)33 outpatient locations6 contract therapy locations/4 onsite rehab locations3 occupational health clinics3 day institute clinicsConstruction of new 60 bed facility on SSM DePaul Campus; expands hospital bed capacity to 95 up
Slide 16: Inpatient Rehab Regulatory Environment
Inpatient Rehab Regulatory Environment 10/1/11 net 1.7% increase in Medicare ratesRecent Obama proposalMove 60% to 75%Equalization payments between IRFs and SNFsSpecial committee sequestration
Slide 17: Outpatient Rehabilitation Outpatient Rehab Clinics
Outpatient Rehabilitation Outpatient Rehab Clinics
Slide 18: Outpatient Rehab Clinics
Outpatient Rehab Clinics Outpatient Rehab Facilities (Number of Facilities) ^ 952 Outpatient Margin Opportunity Continue to expand former HealthSouth clinics' EBITDA margins2009 EBITDA margin differential - greater than 5%2010 EBITDA margin differential - greater than 3%Former HealthSouth clinics' r
Slide 19: Outpatient Rehab locations
Outpatient Rehab 116 locations Philadelphia/South Jersey 82 locations North Jersey
Slide 20: Outpatient Rehab - St. Louis, MO locations
Outpatient Rehab - St. Louis, MO 39 locations
Slide 21: Outpatient Rehabilitation Contract Therapy
Outpatient Rehabilitation Contract Therapy
Slide 22: Contract Services
Contract Services 534 contracts in 31 states and the District of ColumbiaLTM Q3 '11 Revenue $153.2MStrong ROI with organic growth only
Slide 23: Outpatient Rehab Regulatory Environment
Outpatient Rehab Regulatory Environment Commercial - StableMedicareMPPR changes to therapy payments (effective Jan. 2011)25% reductions to practice expense component for 2nd and subsequent codesContract Therapy rates
Slide 24: Financial Overview
om “eset Financial Overview
Slide 25: Net Revenue and Adjusted EBITDA Trends
$2,390 $2,240 $2,153 Note: In Millions * 2010 EBITDA is credit agreement EBITDA Pro Forma for Regency CAGR 5.4% CAGR 10.6% $331* $330 $270 $240 $1,753 Net Revenue Adjusted EBITDA $2,086 $292 19.0% 21.8% Net Revenue and Adjusted EBITDA Trends
Slide 26: Key Financial Metrics Pricing and Volume Trends
Key Financial Metrics Pricing and Volume Trends Specialty Hospital Revenue per Patient Day1 / Admissions Outpatient Rehab Revenue per Visit2 / Visits (Admissions in Thousands) (Visits in Thousands) 1 Net revenue per patient day is calculated by dividing specialty hospital direct patient service reve
Slide 27: Annual Capital Expenditures
Annual Capital Expenditures ($ in millions)
Slide 28: Intense Focus on Free Cash Flow Generation
Free Cash Flow Free Cash Flow1 Intense 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 1 See slide 33 for non-GAAP reconciliation
Slide 29: Debt and Leverage Summary
As of 12/31/08 As of 12/31/09 As of 12/31/10 As of 9/30/11 Cash and Equivalents $ 64 $ 84 $ 4 $ 10 Revolving Credit Facility ($300mm) 150 0 25 50 Term Loan B 657 483 482 840 Other Debt 5 6 6 5 Total Senior Debt 811 489 513 895 Sr. Sub. Notes due 2015 658 612 612 345 Total Op. Co. Debt $ 1,469 $ 1,10
Slide 30: 2012 Guidance
2012 Guidance ($ in millions)Revenue $ 2,900 - $ 3,000EBITDA $ 390 - $ 410EPS $ 0.86 - $ 0.94
Slide 31: Questions
... Questions
Slide 32: Appendix: Additional Materials
Appendix: Additional Materials
Slide 33: Non-GAAP Reconciliation
Non-GAAP Reconciliation 2008 2009 2010 LTM Q3 '11 Net Income $ 25 $ 79 $ 82 $ 97 (+) Income tax 26 37 42 58 (+/-) Equity in losses/(earnings) of unconsolidated subsidiaries - - 1 (1) (+/-) Other expense / (income) - 1 (1) 0 (+) Interest expense, net 146 132 112 100 (-/+) (Gain) / Loss on debt retire
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