Select Medical Holdings Corporation · NYSE:SEM
Select Medical — Non-Deal Roadshow (October 2011)
31 slides from Select Medical's roadshow presentation, Oct 4, 2011
Slide 1: RBC Capital Markets - Non-Deal Roadshow
RBC Capital Markets - Non-Deal RoadshowOctober 4-5, 2011
Slide 2: Disclosure
Disclosure 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
Slide 3: Select Medical Today
Select Medical Today 110 LTAC Hospitals with 4,627 beds in 28 States 952 Outpatient Rehab Clinics in 34 States and the District of Columbia $2.6 Billion Net Revenue LTM Q2 '11$335 Million Pro Forma Adjusted EBITDA LTM Q2 '11127,500 Employees in the United States 9 Inpatient Rehab Facilities (IRF) wi
Slide 4: Significant Scale and Breadth
Contract Therapy 513 locations 31 states and District of Columbia Note: As of June 30, 2011 Outpatient Rehab 952 clinics 34 states and District of Columbia LTAC 110 hospitals 28 states Inpatient Rehab 9 hospitals/4 units 5 states WA OR CA MT ID NV AZ WY UT CO NM TX ND SD NE KS OK MN LA AR IA WI MI M
Slide 5: Recent Events
Recent Events $150 million Share Buyback Program (increased from $100 million in August 2011)June 1, 2011 - Debt RefinancingBaylor Health System Rehab Joint Venture - Closed April 1, 2011Miami Rehab addition - January 1, 2011
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 uni
Slide 7: Strong Track Record of Growth
(2003) (1999) Strong Track Record of Growth Company has Struck the Right Balance of Both Organic and Acquisitive Growth ATHandIntensiva(1998) LBO Outpatient Division IPO (2001) Founded (Nov 1996) (2005) IPO (2009) (2010) (2007) De Novo - 63 specialty hospitals and 314 outpatient clinics opened since
Slide 8: Balanced Payor Mix
Balanced Payor Mix Specialty Payor Mix Outpatient Payor Mix Overall Payor Mix Commercial Payors and Other 89% Medicare/ Medicaid11% Medicare/Medicaid 66% Commercial Payors and Other 34% Note: LTM Q2 '11
Slide 9: Segment Overview
Segment Overview
Slide 10: Overview of LTACHs
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 LTACHs Overview Note: As of June 30, 2011 New Hospitals Added 2008-09 ? 10 LTACs and 2 Rehab Adjusted EBITDA 2008 ($25.0)MAdjusted EBITDA 2009
Slide 11: Regency Acquisition
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 Co
Slide 12: LTAC Hospital Regulatory Environment Summary
LTAC Hospital Regulatory Environment Summary 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.)Exte
Slide 13: Specialty Hospitals Inpatient Rehabilitation
Specialty HospitalsInpatient Rehabilitation
Slide 14: Rehabilitation Hospitals
Rehabilitation Hospitals Nine hospitals - 508 beds, four managed unitsKessler Institute (3)Miami, FL (1)Baylor (2) - Non-consolidatedDenton, TX (1) - Non-consolidatedPenn State Hershey Rehabilitation (1)SSM Rehabilitation (1) LTACH Inpatient Rehab Contract Therapy Outpatient Rehab
Slide 15: Rehab Overview - Kessler Institute
Rehab Overview - Kessler Institute 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
Slide 16: Rehab JV Overview
Rehab JV Overview 80 inpatient rehab beds33 outpatient locations (18 SSM, 15 Select)6 contract therapy locations/4 onsite rehab locations3 occupational health clinics3 day institute clinicsConstruction of new 60 bed facility on SSM DePaul Campus ; expands bed capacity to 95 upon completionExpansion
Slide 17: Inpatient Rehabilitation Regulatory Environment
Inpatient Rehabilitation 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 LTACH Inpatient Rehab Contract Therapy Outpatient Rehab
Slide 18: Outpatient Rehabilitation Segment: Outpatient Rehab Clinics
Outpatient Rehabilitation SegmentOutpatient Rehab Clinics
Slide 19: Outpatient Rehabilitation Clinics
Outpatient Rehabilitation Clinics Outpatient Rehab Facilities (Number of Facilities) ^ 952 Source: Company public filings and websites as of June 30, 2011. Outpatient Margin Opportunity Continue to expand former HealthSouth clinics' EBITDA margins2009 EBITDA margin differential - greater than 5%2010
Slide 20: Outpatient Rehabilitation locations
Outpatient Rehabilitation 119 locations Philadelphia/South Jersey 79 locations North Jersey LTACH Outpatient Rehab Inpatient Rehab Contract Therapy
Slide 21: Outpatient Rehabilitation - St. Louis, MO locations
Outpatient Rehabilitation - St. Louis, MO 39 locations LTACH Outpatient Rehab Inpatient Rehab Contract Therapy
Slide 22: Outpatient Rehabilitation Regulatory Environment
Outpatient Rehabilitation Regulatory Environment Commercial - StableMedicareMPPR changes to therapy payments (effective Jan. 2011)25% reductions to practice expense component for 2nd and subsequent codesContract Therapy rates LTACH Outpatient Rehab Inpatient Rehab Contract Therapy
Slide 23: Outpatient Rehabilitation Segment: Contract Therapy
Outpatient Rehabilitation SegmentContract Therapy
Slide 24: Contract Services
Contract Services 513 contracts in 31 states and the District of ColumbiaLTM Q2 '11 Revenue $151.8MStrong ROI with organic growth only LTACH Inpatient Rehab Outpatient Rehab Contract Therapy
Slide 25: Financial Overview
Financial Overview
Slide 26: Historical Net Revenue and Adjusted EBITDA
$2,390 $2,240 $2,153 Historical Net Revenue and Adjusted EBITDA Note: In Millions * 2010 EBITDA is credit agreement EBITDA Pro Forma for Regency CAGR 5.4% CAGR 10.6% $331* $330 $270 $180 $1,165 Net Revenue Adjusted EBITDA $1,392 $206 19.5% 13.9%
Slide 27: Key Financial Metrics: Pricing and Volume Trends
Key Financial Metrics Pricing and Volume Trends Specialty Hospital Revenue per Patient Day1 / Admissions Outpatient Rehab Revenue per Visit2 / Visits (Admissions in Thousands) (Visits in Thousands) 1 Net revenue per patient day is calculated by dividing specialty hospital direct patient service reve
Slide 28: Free Cash Flow
Free Cash Flow Free Cash Flow1 Intense Focus on Free Cash Flow Generation ($ in millions) Note: Free Cash Flow calculated as Net Cash Provided by Operating Activities less Purchases of Property and Equipment 1 See slide 31 for non-GAAP reconciliation
Slide 29: Appendix: Additional Materials
Appendix: Additional Materials
Slide 30: Non-GAAP Reconciliation
Non-GAAP Reconciliation ($ in millions) * Note: Pro Forma Adjusted EBITDA per the current Credit Agreement (includes pro forma for Regency and less cash non-controlling interest). 2008 2009 2010 LTM Q2 '11 Net Income $ 25 $ 79 $ 82 $ 80 (+) Income tax 26 37 42 45 (+) Equity in losses of unconsolidat
Slide 31: Sclect
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