Select Medical Holdings Corporation · NYSE:SEM
Select Medical — Investor Presentation (November 2017)
29 slides from Select Medical's investor presentation, Nov 29, 2017
Slide 1: Forward-Looking Statements
Forward-Looking Statements This presentation may contain forward-looking statements based managementexpectations.Numerousfactors,includingthose market conditions and those detailed from time-to-time in the on current relatedto Company’s filings with the Securities and Exchange Commission, may cause
Slide 2: Select Medical Overview
Select Medical Overview Founded in 1996 $4.4 Billion Net Revenue LTM Q2 2017 2017 (1) $511 Million Adjusted EBITDA LTM 11.7% Adjusted EBITDA Margins SCALE AND EXPERTISE Leading provider of post-acute services with operations in 46 states and D.C. Headquartered in Mechanicsburg, Pennsylvania, Select
Slide 3: Leading Post Acute Care Provider
Leading Post Acute Care Provider Largest operator of Long-Term Acute Care Hospitals (LTACH) • 101 LTACH’s operating in 27 states. Second largest operator of Inpatient Rehabilitation Hospitals (IRF) • 22 IRF’s operating in 10 states. Largest operator of Outpatient Rehabilitation Clinics • 1,604 clini
Slide 4: Revenue Mix
Revenue Mix LTM Q3 ‘17 2016 2014 Contract Therapy 1% Contract Therapy 7% Outpatient 20% Occ Med 23% Occ Med 23% LTACH 40% LTACH 42% LTACH 60% IRF 13% Outpatient 22% Outpatient 23% IRF 12% IRF 14% 5
Slide 5: Payor Mix
Payor Mix 2014 LTM Q3 ‘17 Medicare 30% Medicare 45% Non Medicare 55% Non Medicare 70% 6
Slide 6: Payor Mix
Payor Mix a... MEDICAL 2014 LTM Q3 ‘17 Medicare 30% Medicare Medicare 45% Non 55% Medicare 70% Non Select Medical: Improving Quality of Life
Slide 7: LTACH Criteria Impact
LTACH Criteria Impact Average Daily Census 3,200 $1,800 Case Mix Index LTACH Revenue PPD 1.28 $1,750 3,000 1.26 $1,739 2,849 $1,700 $1,690 2,800 2,719 2,780 2,705 2,671 $1,650 2,600 1.20 1.19 1.19 $1,600 2,400 $1,580 $1,596 $1,550 2,200 $1,537 $1,500 (Rate) 2,000 (ADC1) 2013 2014 2015 2016 2017 Q3 Y
Slide 8: LTACH Criteria Impact
LTACH Criteria Impact [19.6% compliance a... 3,200 ~eAverage Daily Census —*Case Mixindex “®=LTACH Revenue PPD 4.98 3,000 2,800 2,600 2,400 2,200 $1,537 2,000 2013 2014 (aoc) (1.7) patients per hospital per day pre vs post criteria Select Medical: Improving Quality of Life 2015 2016 2017 03 YTD MEDI
Slide 9: Our Rehabilitation "Model"
Our Rehabilitation “Model” • Partner with leading health systems through joint venture relationships – Inpatient rehab is the basis of “model” but can include full – – – – post acute network of services. Outpatient Rehab LTACH Day Rehab Occupational Medicine 11
Slide 10: Current Rehabilitation Operations
Current Rehabilitation Operations [JCleveland Clinic Rehabliitation Hospital ..ilfiiiltictl WCfl Sef!ld Uedcll _IIJI' O·luh-ioHealth Rehabil itation Hospital In partners-hlp with Select Mtdiul STATE HERSHEY 1 1-'tNIR' ehabilitation · Hospital SSM Rehabilitation Network Se-lect Medical (3RIVERSIDE R.
Slide 11: Rehabilitation Network Growth
Rehabilitation Network Growth New JV Partnerships: Under Construction • Ochsner New Orleans – New 60 bed IRF • Projected opening in Early 2018 • Dignity Las Vegas, NV – New 60 bed IRF • Projected opening in 2019 Signed • Riverside Health – Newport News, VA • • New 50 bed IRF to replace existing hosp
Slide 12: Post Acute Partners
Post Acute Partners Multi-billion dollar health system with 32 acute care hospitals with over 3,900 staffed acute care beds. Net patient revenue of over $4 billion. Three IRFs with 125 beds including recent opening of 30 bed HIH in July 2017, 61 outpatient clinics and other contract therapy and staf
Slide 13: Post Acute Partners
Post Acute Partners (oe) SSMHealth. Ce ‘SSM Rehabilitation Network ah Select MEDICAL Multi-billion dollar health system with 32 acute care hospitals with over 3,900 staffed acute care beds. Net patient revenue of over $4 billion. Three IRFs with 125 beds including recent opening of 30 bed HIH in Jul
Slide 14: Outpatient Rehabilitation
Outpatient Rehabilitation • Largest operator of outpatient rehab clinics in U.S. • March 2016 acquired Physiotherapy Associates (second largest at time of acquisition) –500+ clinics –Over $20 million of synergies • Growth through denovo clinics and tuck-in acquisitions 17
Slide 15: Outpatient Rehabilitation - Industry
Outpatient Rehabilitation - Industry Source: Company public filings and websites as of September 30, 2017 1,604 Outpatient Rehabilitation Centers (37 States and D.C.) As of 09/30/2017 18 ATHLETICO (400) USPH (579) ATI (500) Select (1,604)
Slide 16: Outpatient Rehab Clinics
Outpatient Rehab Clinics 19 VISITS (000’s) 8,216 7,799 5,219 4,569 4,781 4,971 4,470 LTM YEAR201120122013201420152016Q3 2017 REVENUE PER VISIT $103 $103 $104 $103 $103 $102 $102
Slide 17: Outpatient Rehab Clinics
Outpatient Rehab Clinics a... MEDICAL ey ey 71799 VISITS ] Ty | YEAR 2011. 2012.2 2013'S «2014S «2015-2016 a REVENUE ey Ea PER VISIT
Slide 18: Concentra
Concentra Concentra is the largest provider of occupational health services in the U.S. –445 locations across 43 states • Service Lines: – – – 312 occupational health centers (with some consumer health) 102 onsite clinics at employer locations 31 Community Based Outpatient Clinics (CBOC) serving Vet
Slide 19: Post-Acquisition Update
Post-Acquisition Update • • Management transition Earnings 2015 – – – Revenue = $997 million Adjusted EBITDA Adjusted EBITDA = $90 million Margin = 9.0% ‘17 • Earnings LTM Q3 – – – Revenue = $1.0 billion Adjusted EBITDA= $150.6 million Adjusted EBITDA Margin = 14.8% • Implemented $44 million of cost
Slide 20: Post-Acquisition Update
Post-Acquisition Update a... ¢ Management transition ¢ Earnings 2015 — Revenue = $997 million — Adjusted EBITDA = $90 million — Adjusted EBITDA Margin = 9.0% ¢ Earnings LTM Q3 ‘17 — Revenue = $1.0 billion — Adjusted EBITDA = $150.6 million — Adjusted EBITDA Margin = 14.8% ¢ Implemented $44 million o
Slide 21: Financial Metric Trends
Financial Metric Trends Net Revenue Adjusted EBITDA $4,375 $4,286 $511 2013 2014 2015 2016 LTM Q3 17 2013 2014 2015 2016 LTM Q3 17 ($ in millions) ($ in millions) Hospitals Outpatient Concentra Hospitals Outpatient Concentra 24 $466 $399 $373$364 $3,743 $3,065 $2,976
Slide 22: Annual Capital Expenditures
Annual Capital Expenditures Accelerated development spending 2014-2017 $217 $225 $200 $175 $150 $125 $100 $75 $50 $25 $0 2013 2014 Maintenance 2015 Development 2016 LTM Q3 '17 Concentra Systems 25 ($ in millions) $183 $95 $162 $74
Slide 23: Debt Maturities as of 09/30/2017
Debt Maturities as of 09/30/2017 SEM Revolver (L + 3.25%) $1,200 $1,000 $800 $600 $400 $200 $12 $0 2017 2018 2019 2020 2021 2022 2023 2024 Note: New SEM Revolver and Term loans have springing maturity feature and become due in early 2021 unless SEM Senior Notes are refinanced prior to. 26 SEM Term L
Slide 24: Financial Guidance 2017
Financial Guidance 2017 Net Revenue $4,400M - $4,500M Adjusted EBITDA $530M - $550M EPS $0.72 - $0.82 Adjusted EPS $0.81 - $0.91 Note: See Slide 30 for non-GAAP reconciliation 27
Slide 25: Appendix: Additional Materials
Appendix: Additional Materials
Slide 26: Non-GAAP Reconciliation
Non-GAAP Reconciliation LTM Q3 17 2013 $123 2014 $128 2015 $136 2016 $125 Net Income $120 Income tax 75 76 72 56 63 Equity in losses/(earnings) of unconsolidated subsidiaries (2) (7) (17) (20) (21) Interest expense, net (Gain) / Loss on debt retirement Other (Gains) / Losses Concentra/Physio acquisi
Slide 27: Non-GAAP Reconciliation – Financial Guidance 2017
Non-GAAP Reconciliation – Financial Guidance 2017 Low High Net Income $124 $136 Income tax 76 84 Interest expense 155 155 Equity in earnings of unconsolidated subsidiaries (22) (22) Loss on early retirement of debt 20 20 Stock Based Compensation 19 19 Depreciation and Amortization 158 158 Adjusted E
Slide 28: selectmedical.com/investor-relations/for-investors
selectmedical.com/investor-relations/for-investors
Slide 29: Improving Quality of Life
z . MEDICAL = Improving Quality of Life selectmedical.com/investor-relations/for-investors
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