Genesis Healthcare, Inc. · OTC:GENNQ
Genesis Healthcare — Bear Stearns Presentation 2006
25 slides from Genesis Healthcare's conference presentation, 2006
Slide 1: Genesis HealthCare
Kom Genesis HealthCare
Slide 2: Forward Looking Statements
Forward Looking Statements Certain statements made in this presentation which are not historical facts may be “forward-looking” statements (as defined in the private securities litigation reform act of 1995) that involve risks and uncertainties and are subject to change at any time these forward-loo
Slide 3: Today's Agenda
Today’s Agenda Company Overview • Strategic Initiatives Industry Environment Financial Overview 3
Slide 4: Company Overview
Company Overview Strategic Initiatives
Slide 5: Company Highlights
Company Highlights Geographically Concentrated Portfolio Significant Facility Ownership with Intent to Modernize Strong Operating Cash Flow Low Interest Rate Risk and Leverage Solid Financial Foundation Well-positioned for Organic and External Growth 5
Slide 6: Strategic Priorities
Strategic Priorities Long Term Growth through Internal Investment • Drive growth through occupancy and mix improvements • Facility renovation • Specialty units • Relationship management Growth Supplemented Through • Selective “fill-in” acquisitions • Acquisitions of outside joint-venture interes
Slide 7: Progress on Strategic Priorities
Progress on Strategic Priorities As of June 30, 2006 Completed 12 facility renovations in the quarter • Common area and patient room refurbishments • Protects facilities with high occupancy Completed 3 new specialty units in the quarter • Addition of clinical capabilities (i.e. dialysis, ventila
Slide 8: Industry Environment
Industry Environment on Genesis HealthCare”
Slide 9: Reimbursement Outlook
Reimbursement Outlook Expect 2 ½ - 3 ½ % increase in overall Medicaid rates in 2007 Medicare Reimbursement • Stable for the remainder of 2006 • 3.1% market basket adjustment effective October 1, 2006 Part B therapy cap exception process expires on 12/31/06 9
Slide 10: Financial Overview
Financial Overview Hon Genesis HealthCare”
Slide 11: Financial Highlights
Financial Highlights Quarter Ended 6/30/06 Q3 2006 Non-GAAP EPS of $0.56 meets Wall Street consensus estimates on an as adjusted basis* Revenues grow 5.9% on adjusted basis over prior year Occupancy remains strong at 90.9% Rehabilitation business continues to improve * On an as adjusted basi
Slide 12: Cash Flow
Cash Flow Quarter Ended 6/30/06 Use of $0.2 million of operating cash due to: • Advanced funding of recently renewed insurance programs • $12.0 million reduction due to permanent PA Medicaid payment slowdown Capital spending guidance for 2006 at high end of $90 - $100 million • CAPEX of $23.5 mi
Slide 13: Financial Results
Financial Results Quarter Ended 6/30/06 Inpatient Services • Revenue grew 5.7% v. Q3 2005 • EBITDA* grew 3.5% v. Q3 2005 • Occupancy at 90.9% versus 89.4% in Q3 2005 Rehabilitation Services • Revenue** grew 13.7% v. Q3 2005 • EBITDA grew 24.2% v. Q3 2005 * Assumes adjusting for favorable cost re
Slide 14: Summary
Summary Focus on internal investment • Invest in facilities and clinical capabilities Reimbursement outlook appears stable Substantial free cash flow generation Reduced interest rate risk and leverage Owned assets conservatively valued on a book and market basis 14
Slide 15: We improve the lives we touch
S N S S S x WE IMPROVE THE LIVES WE TOUCH ys Ss a S THROUGH THE DELIVERY Ss D OF HIGH QUALITY HEALTHCARE Ss & Ss os AND EVERYDAY COMPASSION. x » & L~) s $ 2 = ~Y > io L 8S NO Soa Ne ) a Genesis HealthCare”
Slide 16: Appendix
Appendix oo Genesis HealthCare”
Slide 17: Genesis HealthCare Corporation
Genesis HealthCare Corporation GHC is a leading provider of healthcare and support services to the post-acute elderly population in its core markets GHC operates 208 facilities, primarily SNFs • Operate more than 25,000 beds of which 89% are SNFs • Facilities are located along the east coast in 12
Slide 18: Strategic Plan – Industry Environment
Strategic Plan – Industry Environment Increasing acuity in the SNF setting • Changes in IRF, LTAC regulations and reimbursement Skilled nursing is the lowest cost setting • Significantly lower than IRF and LTAC setting Penetration of managed care • Break down of regulatory barriers (i.e. 3 day
Slide 19: Information Systems
Information Systems Integrated operational, clinical and financial operating system operational in 180 facilities as of March 31, 2006 Integrated labor management system • 100% of facilities are live on labor / time collections system Online purchasing system 19
Slide 20: Payor Continuum
Payor Continuum Medicai Care Line Medicare Private d Pay & Hospital Includes: Excludes: Other External •Therapy •Pharmacy Excludes: •Therapy •Pharmacy Care •Ancillaries •Pharmacy •Ancillaries Coordinato rs • $400 Per • $219 Per • $185 Per Diem Diem Diem Approx. • 15.5% of • 20.5% of • 64.0% of 90% o
Slide 21: Labor Environment
Labor Environment* Employed Labor Cost Growth (% change from prior quarter) Inpatient and rehab 3.0% challenged by a tight 1.0% labor market -1.0% In Q3 2006, nursing Q1 Q2 Q3 Q4 Q1 Q2 Q3 2005 2005 2005 2005 2006 2006 2006 wage costs moderate slightly Agency Labor Expect rates to continue $4.0
Slide 22: Complementary Rehab Business
Complementary Rehab Business Strong top line growth Tactical plans underway • New management team in place • Re-priced external contracts • Re-designed fee structure Well-positioned for evolving care delivery in SNF’s • Limited capital required Q4 tends to be the most challenging quarter for
Slide 23: Occupancy
Occupancy Occupancy 92.0% 91.0% 90.0% 89.0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 2005 2005 2005 2005 2006 2006 2006 23
Slide 24: Quality Census Mix
Quality Census Mix Quality Census Mix (% of total average daily census) 36.5% 36.0% 35.5% 35.0% 34.5% Q1 Q2 Q3 Q4 Q1 Q2 Q3 2005 2005 2005 2005 2006 2006 2006 24
Slide 25: Inpatient Sites of Service
Inpatient Sites of Service State Owned / Owned / Revenue Leased Leased Beds* ($ in millions)** Facilities* Pennsylvania 40 5,159 $369.5 New Jersey 27 4,176 $342.2 Maryland 19 2,396 $207.0 Massachusetts 18 2,433 $199.2 West Virginia 19 1,700 $133.3 Connecticut 9 1,330 $106.4 New 12 1,180 $93.3 Hampsh