Encompass Health Corporation · NYSE:EHC
Encompass Health — HealthSouth — Bank of America Merrill Lynch Leveraged Finance Conference (November 2011)
20 slides from Encompass Health's conference presentation, Nov 30, 2011
Slide 1: Bank of America Merrill Lynch Leveraged Finance Conference
Exhibit 99.1 Bank of America Merrill Lynch Leveraged Finance Conference Orlando, FL| November 30, 2011 Doug Coltharp, Executive Vice President and Chief Financial Officer Ed Fay, Senior Vice President and Treasurer
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 outlook, views and plans with respect to future events, including legislative and regulatory developments, strategy, capital expenditure
Slide 3: Largest Provider of Inpatient Rehabilitative Healthcare Services in the U.S.
Exhibit 99.1 Inpatient Rehabilitation Hospitals (“IRF”) Outpatient Rehabilitation Satellite Clinics Hospital-Based Home Health Agencies Employees Revenue in 2010 Inpatient Discharges in 2010 Outpatient Visits in 2010 Number of States NYSE (HLS) Exchange (Symbol) Largest Provider of Inpatient Rehabil
Slide 4: 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 5: Our Patients
Exhibit 99.1 Our Patients Most Common Conditions (Q3 2011) 1. Neurological 17.1% 2. Stroke 16.9% 3. Debility 10.9% 4. Fracture of the lower extremity 10.2% 5. Other orthopedic conditions 9.9% 6. Knee/Hip replacement 8.5% 7. Brain injury 7.7% 8. Cardiac conditions 4.2% 9. Spinal cord injury 2.8% 10.
Slide 6: Q4 2011 Observations
Exhibit 99.1 Volume: • Q3 2011 YTD discharge growth of 6.3% • On track to achieve 1.0% to 2.0% discharge growth in Q4 2011 − Strong volume comparison in Q4 2010 of 5.9% − Would bring full-year discharge growth to between 4.9% and 5.2% Guidance confirmation for full year 2011 Adjusted EBITDA (1) : •
Slide 7: HealthSouth is now positioned with a lower-cost, flexible capital structure
Exhibit 99.1 10% of the outstanding principal is currently callable per annum at 103% HealthSouth is now positioned with a lower-cost, flexible capital structure… $500 Revolver L+225 September 30 , 2011 (3) $276 Undrawn (1) Based on trailing four-quarter Adjusted EBITDA of $455.4 million; reconcilia
Slide 8: Leverage Ratio and Interest Expense
Exhibit 99.1 Leverage Ratio (1) (billions) (1) Reconciliation to GAAP provided on slides 16 - 20. (2) Expect full-year adjusted free cash flow to be at least $210 million reflecting growth over full-year 2010 of at least 16%. Interest Expense $229 $131
Slide 9: Priorities for reinvesting free cash flow
Exhibit 99.1 Expect full-year adjusted free cash flow (1) to be at least $210 million reflecting growth over full -year 2010 of at least 16% (as of November 30, 2011) HealthSouth’s priorities for reinvesting free cash flow… • Additional debt prepayment (revolver, term loan and senior notes) • Growth
Slide 10: Estimated Impact of Budget Control Act
Estimated Impact to HealthSouth Budget Control Act Comments Above estimates assume no mitigating actions by HealthSouth Exhibit 99.1 Medicare Reduction Emanating from the Budget Control Act: 2% Sequestration § Special Committee fails and sequestration is triggered − Medicare limited to 2% sequestrat
Slide 11: Successfully managed through Medicare payment cuts and recession
Exhibit 99.1 HealthSouth has successfully managed through Medicare payment cuts and an economic recession… Adjusted EBITDA ($million) Discharges
Slide 12: Strong and Sustainable Business Fundamentals
Growth Opportunities Financial Strengths Industry Leading Position Attractive Healthcare Sector Cost-Effectiveness Real Estate Portfolio Exhibit 99.1 Strong and Sustainable Business Fundamentals (1) Inclusive of non-consolidated entities
Slide 13: Appendix
Exhibit 99.1 Appendix
Slide 14: Medicare spending on post-acute settings
Exhibit 99.1 Note: These numbers are program spending only and do not include beneficiary copayments. Sources : Center for Medicare & Medicaid Services, Medicare Trustees Report May 2011 - Page 45 and Medpac Data Book, June 2011 - Skilled nursing facilities 18.1% Home health agencies 17.7% Inpatient
Slide 15: Debt Schedule
Exhibit 99.1 Debt Schedule (1) Based on 4 quarter trailing and 2010 Adjusted EBITDA of $455.4 million and $409.6 million, respectively; reconciliation to GAAP provided on slides 16,17,18, and 20.
Slide 16: Reconciliation of Net Income to Adjusted EBITDA
Exhibit 99.1 Reconciliation of Net Income to Adjusted EBITDA (1)(3) (1) (2) (3) (4) - Notes on page 18
Slide 17: Reconciliation of Net Income to Adjusted EBITDA
Exhibit 99.1 Reconciliation of Net Income to Adjusted EBITDA (1)(3) (1) (2) (3) (4) - Notes on page 18.
Slide 18: Reconciliation Notes for Slides 16-17
Exhibit 99.1 Reconciliation Notes for Slides 16-17 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 19: Adjusted Free Cash Flow
Exhibit 99.1 Adjusted Free Cash Flow (1) Maintenance capital expenditures are expected to be approx $50 million in 2011 and $75 million in 2012. (2) Final swap payment of $10.9 million was made in March 2011.
Slide 20: Net Cash Provided by Operating Activities
Exhibit 99.1 Net Cash Provided by Operating Activities
HealthSouth — Bank of America Merrill Lynch Leveraged Finance Conference (November 2011) on 6ix